Analysis of Spatial Market Integration and Price Transmission of Cowpea between Kano and Abia, Imo and Enugu States
Abstract
The study of market integration has gained attention in recent times due to differences in the natural endowment of different regions. Regions with comparative advantage are encouraged to produce goods that can predominantly do well in their region and purchase their deficit. This suggests that there will be an inter dependence of one region on the other to meet their local needs. Market integration tries to measure the degree of change in price of similar goods as they move from one location to another especially from the source of production to consumption centre. The work investigated into price transmission of cowpea between source market of Kano State and destination markets of Abia, Enugu and Imo States. It used secondary data sources of monthly cowpea prices obtained from National Bureau of Statistics (NBS). The study tested the stationarity of the data series, then used the first difference of the series for the study. The researcher also conducted a cointegrated tested using the Johansen model. The trace and eigenvalue tests indicated one cointegrating vector between the source market and destination market prices of cowpea implying that the two price series were cointegraed. The ARDL model was used to establish the existence of long run relationship in the prices of cowpea in the different markets. The result of the bound test of the ARDL showed that there was a long run relationship between source and destination markets since the computed F- statistic was greater than both lower and the upper bound values at all level of significance tested ranging from 1-10 levels of significance. The study therefore concluded that there was a long run relationship in the prices of cowpea among the markets. An ECM value of -0.417295 was obtained. This implies that, the rate of adjustment of price of 42%, was relatively a slow rate of adjustment of the markets prices to equilibrium. The study recommends policies that ensure stability in prices of agricultural produces should be made; also government should provide good road network system between the source market and the destination markets which could further enhance market integration.
NAJ supports free online communication and exchange of knowledge as the most effective way of ensuring that the fruits of research and development practice are made widely available. It is therefore committed to open access, which, for authors, enables the widest possible dissemination of their findings and, for readers, increases their ability to discover pertinent information. The Journal adopts and uses the CC: BY license and is open access. This license lets others distribute, remix, adapt, and build upon your work, even commercially, as long as they credit you for the original creation. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the Journal’s published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work. Copyright for articles published in this Journal is retained by the Journal.
