Market Integration and Price Leadership among Major Mulberry Cocoon Markets in South India

Abstract

Market integration is a good proxy for measuring market efficiency and the emerging price signals from the markets can be utilized to benefit both farmers and reelers alike. The present study empirically examines the dynamic interrelationships among the prices of major cocoons markets viz. Ramanagaram (Karnataka), Sidlaghatta (Karnataka), Hindupur (Andra Pradesh) and Dharmapuri (Tamil Nadu) in terms of market integration. The monthly average prices of cross breed mulberry cocoons for a period between April 2002 and March 2021 were considered for the present study. The Augmented Dickey-Fuller (ADF) (tau) testindicated that all the price series were non-stationary at level, but were stationary after first difference. The Johansen's multivariate cointegration procedure revealed existence of cointegration among the prices of cocoon markets. The Vector Error Correction Models (VECM) revealed a long run price causality running from Ramanagaram and Sidlaghatta markets to all other markets considered under study. The Granger causality test indicated a unidirectional causality running from Ramanagaram and Sidlaghatta markets to all markets and not vice versa. The prices prevailed in Ramanagaram and Sidlaghatta markets controlled and decided the current prices of cross breed cocoons both in long run and short run in all other markets considered for the study.

Price Setting Behavior and Causal Relationships among Major Bivoltine Cocoon Markets in India: An Econometric Analysis

“…With the advances in time-series and econometric techniques, the recent studies have started using the cointegration methodology. Chaithra (2015) and Halagundegowda et al (2021b) used Vector Error Correction Model (VECM) for analyzing the degree and nature of integration among price series of mulberry cocoons. The former study analyzed cointegration of specially separated cocoon markets in Ramanagaram, Sidlaghatta and Vijayapura in Karnataka; whereas, the later one investigated the vertical integration among price series of Indian and Chinese raw silk and Indian reeling cocoons.…”