Apple Market Integration: Implications for Sustainable Agricultural Development

Abstract

In a market driven economy, price signals guide and regulate production, consumption and marketing decisions over time, form and place. Identifying the causes of price differences in interregional or spatial markets has therefore become an important economic analytical tool to understand markets better. If markets are not well integrated, price signals are distorted, which leads to an inefficient allocation of resources. Further, it may constrain sustainable agricultural development and aggravate inequitable patterns of income distribution. This paper examines the degree of spatial market integration in the regional apple markets of Pakistan using cointegration analysis and monthly wholesale price data from January, 1996 to December, 2005. Results show that apple markets are perfectly integrated and Quetta is the dominating market. The high degree of market integration observed in this case is consistent with view that apple markets in Pakistan are quite competitive and provide little justification for government intervention designed to improve competitiveness to enhance market efficiency.