| We investigate measurement of market integration of staple food markets in developing countries. The analysis takes the Parity Bound Model as starting point and modifies this model by parameterizing and estimating transaction costs. The specification of transaction costs takes account of transport costs, fixed source costs, fixed destination costs, ad valorem taxes & levies and seasonality an is implemented on the basis of a specific sub-sample of price differentials. Price differentials combined with predicted transaction costs enable the measurement of market integration for each location and each period. The proposed method is applied to the Malawi maize market with monthly data from June 1999 to October 2009 for 26 districts. This period covers two... |
