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Measuring the Degree of Integration on the Dairy Products Market in Malawi

Author

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  • Chalmers, Neil George
  • Revoredo-Giha, Cesar
  • Jumbe, Charles

Abstract

Using monthly data for the period 2006–2011, this study analyzed the degree of spatial market integration in Malawi focusing on two dairy products (liquid milk and powdered milk) sold in the four major towns of the country. The analysis of spatial market integration is important to assess whether to re-establish a dairy processing facility in the northern part of the country. The empirical analysis comprised of the following steps: (1) Integration between prices from different regions were tested using Johansen’s cointegration procedure, with the results indicating that, in the long run, prices in some areas move in a similar direction. (2) Two spatial equilibrium models were estimated using a three-regime bivariate threshold vector autoregressive model (TVAR) and a three-regime threshold vector error correction model (TVECM). The results showed that transaction costs were not a cause for concern between the areas thus northern Malawi does not need to re-establish a dairy processing facility as surplus areas (mainly Southern Malawi) can supply the region.
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Suggested Citation

  • Chalmers, Neil George & Revoredo-Giha, Cesar & Jumbe, Charles, 2015. "Measuring the Degree of Integration on the Dairy Products Market in Malawi," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204286, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc15:204286
    DOI: 10.22004/ag.econ.204286
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    References listed on IDEAS

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    1. Balke, Nathan S & Fomby, Thomas B, 1997. "Threshold Cointegration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 627-645, August.
    2. Barry K. Goodwin & Nicholas E. Piggott, 2001. "Spatial Market Integration in the Presence of Threshold Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 302-317.
    3. Revoredo-Giha, Cesar & Arakelyan, Irina & Chalmers, Neil & Chitika, Rollins, 2013. "How Responsive to Prices is the Supply of Milk in Malawi?," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 160590, African Association of Agricultural Economists (AAAE).
    4. Lo, Ming Chien & Zivot, Eric, 2001. "Threshold Cointegration And Nonlinear Adjustment To The Law Of One Price," Macroeconomic Dynamics, Cambridge University Press, vol. 5(4), pages 533-576, September.
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    6. Revoredo-Giha, Cesar, 2012. "Market Structure and Coherence of International Cooperation: The Case of the Dairy Sector in Malawi," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125274, International Association of Agricultural Economists.
    7. Friederike Greb & Stephan von Cramon-Taubadel & Tatyana Krivobokova & Axel Munk, 2013. "The Estimation of Threshold Models in Price Transmission Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 900-916.
    8. Ming Chien Lo & Eric Zivot, 1999. "Threshold Cointegration and Nonlinear Adjustment to the Law of One Price," Working Papers 0030, University of Washington, Department of Economics.
    9. Jones, Andrew D. & Shrinivas, Aditya & Bezner-Kerr, Rachel, 2014. "Farm production diversity is associated with greater household dietary diversity in Malawi: Findings from nationally representative data," Food Policy, Elsevier, vol. 46(C), pages 1-12.
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    Cited by:

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    More about this item

    Keywords

    Livestock Production/Industries; Marketing;

    JEL classification:

    • A - General Economics and Teaching
    • B - Schools of Economic Thought and Methodology
    • N - Economic History
    • P - Political Economy and Comparative Economic Systems
    • Y80 - Miscellaneous Categories - - Related Disciplines - - - Related Disciplines
    • Z00 - Other Special Topics - - General - - - General

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