The Law of One Price in the Farm Products Markets of Iran (Case of Study: Saffron and bean)

Document Type : Research Paper

Authors

1 Assistant Professor, University of Semnan

2 MSc. Student , University of Semnan

3 MSc. Student, Agricultural Economics, University of Ardakan

Abstract

Agricultural products market is an interval market, where producers and consumers have been distributed at different places. The aim of this study was to analyze the one price law through evaluating the continuity and the type of coherence in the market of 2 depicted agricultural products (saffron and bean) at 12 important provinces of our country (Mazandaran, Gilan, Golestan, Tehran, West Azerbaijan, East Azerbaijan, Semnan, Khorasan Razavi, Isfahan, Fars, Kerman, Khoozestan) which represented the entire of Iran. In this study, the monthly price index logarithm for a 9-year period (1384-92) was used. To estimate the amount of continuity, the Johansson’ co-integration method in vector error correction model (VECM) and Eviews software was applied. The results showed that the complete integration of the markets in the long run was rejected in the market of all 2 agricultural products and the hypothesis of the existence of one rice law among all the markets was not proven. In case of some products, some of the provinces were the governors of the price. According to the results and in order to increase the continuity of the markets, it is suggested to form production and distribution of the products cooperatives and also to develop the facilities and the underlying services.

Keywords

References

  1. Abounoori, I. & Mojaverian, M. (2003), Analysis of the law of one price in the market of agricultural products in Iran. The Quarterly Journal of Commerce, (25): 85-126. (In Farsi)
  2. Asche, F., Gordon, D.V. & Hannesson, R. (2004). Test for market integration and the law of one price: the market for whitefish in France. Marine Resource Economic, (19): 1673-1686
  3. Chizari, A. & Nemati, M. (2012). Test unit prices in the oilseeds market in Iran Compared to world prices (Case of Study: corn, soybeans, cotton). Iranian Journal of Agricultural Economics and Development, (4): 727-736. (In Farsi).
  4. Cournot , A. (1963), researches into the mathematical principle of the theory of wealth. http://books.google.com/books,The macmilan company press
  5. Eskandarpoor, B. kavoosi.M, Rafiee.H, Khaligh.P (2015), Law of one price and dates integration in world markets, Agricultural Economics Research, (3): 159-174. (In Farsi).
  6. Faryadi Shahgoli, F. Ghahramanzade, M. & Dashti, Gh. (2015). Non-linear adjustment and testing the unit price in the market price of chicken meat in the provinces of North West in Iran, Journal of Agricultural Economics, (3): 85-106. (In Farsi).
  7. Ghosh,N. (2012). Markert integration in agricultural commodities in India: a study on impact of movement in international prices on household welfare. Sanei working paper series, 2-12.
  8. Khaligh, P. & Moghadasi, R. (2010). The price of the units on the market of medicinal plants in Iran, (Case of Study: barley and rice). The first regional conference of economic and marketing of medicinal plants, March 2010, Sanandaj. (In Farsi).
  9. Marshall, A. (1961). Principle of Economics, The Macmillan company, new York.

10. Mohanty, S. & Langley, S. (2003). The effects of various policy regimes in the integration of North American grain market. Canadian Journal of Agricultural Economics, (51), 109-120.

11. Nanang,D.M. (2000). A multivariate co-integration test of the law of one price for Canadian softwood lumber markets. Forest Policy and Economics, (1), 347-355.

12. Nofresti, M. (1999). Unit root and co-integration in econometrics, Tehran, Institute of Cultural Services Rasa. First Edition. (In Farsi).

13. Olsson, O. & Hillring, B. (2013), Price relationship and market integration in the Swedish wood fuel market. Bomass and Bioenergy, (57): 78-85.

14. Olsson,,O. Hillring, B., & Vinterback, J. (2010). European wood pellet market integration- a study of the residential sector. Biomass and Bioenergy, 1-8.

15. Ravallion, M. (1986). Testing markets integration. American Journal of Agricultural Economic, 68(1), 109-120.

16. Rostamian, R. (2010). Study Conjunction fish market in Iran, Seventh the biennial Conference on Iranian Economics, February 2010, Karaj. (In Farsi).

17. Sahraeian, M. & Bakhshoodeh, M. (2007). Study Conjunction domestic and global wheat markets in Iran. Journal of Agricultural Economics and Development, (59), 97-118. (In Farsi).

18. Shahvali, O. & Bakhshoodeh, M. (2006). Study Conjunction of fish markets in Iran, Journal of Agricultural Economics, (15): 69-85. (In Farsi).

19. Soori, A. (2015). The Econometric (With the application Eviews8 & Stata12), Cover 2, Tehran, The Ethnography, Third edition. (In Farsi).

20. Stigler, G.J. & Sherwin, R.A. (1985). The extent of a market. Journal of Law and Economics, (28), 555-585.

21. Stigler, G.J. (1952). The theory of price revised, The Macmillan Company, New York.

22. Takayama , T. & judge, G.G. (1971). Spatial and temporal price allocation models, Amsterdam, North-Holland Publishing Company.)

23. Vinuya, F.D. (2007). Testing for market integration and the law of one price in world shrimp markets. Agriculture Economic and Management, (11), 243-265. 

Iranian Journal of Agricultural Economics and Development Research
Volume 48, Issue 3
November 2017
Pages 391-398

Files

Share

How to cite

Statistics