Testing for spatial market integration: evidence for Colombia using a pairwise approach

Iregui, Ana; Otero, Jesús

doi:10.1111/agec.12371

Cited by 9 publications

(7 citation statements)

References 23 publications

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“…We introduce theories of limited attention [34] and two-step flow of communication [35], and decompose zoonotic disease shocks into zoonotic disease outbreaks (objective incident component) and public health scares (subjective information component), so that we can clearly distinguish and isolate the spillovers of the components to meat price risks (Figure 2). village market negatively affect village-level food price, utilizing a multiple regression analysis for small-scale farmers in Southwest China; consistent with Le Cotty, d'Hotel, and Ndiaye [31] claiming that market remoteness measured by distance, i.e., transport costs, has a positive effect on food price volatility, relying upon an autoregressive conditional heteroskedasticity model in Africa; and consistent with Iregui and Otero [32] suggesting that for traded food products, distance is negatively associated with the speed of food price adjustment to the long-run equilibrium, utilizing a pairwise approach to testing for spatial market integration in Colombia.…”

Section: Theoretical Underpinningssupporting

confidence: 63%

“…There is also a connection to the literature on distance-decaying spillovers of public health scares to meat price risks. Our hypothesis that meat price risks are distance-decaying, is consistent with Cudjoe, Breisinger, and Diao [26] maintaining that distance between producer and consumer markets determines food price transmission, employing a threshold cointegration model in Ghana; consistent with Iregui and Otero [27] arguing that distance, namely transportation costs, negatively affects the speed of food price adjustment to shocks in other areas, based on generalized impulse response analysis with a highly disaggregated dataset for Colombia; consistent with Singh-Peterson et al [28] concluding that distance from food distribution center positively affects food price, using a spatial analysis of a healthy food basket survey undertaken across Queensland, Australia; consistent with Palermo et al [29] pointing out that distance from state capital city center is positively related to food price, adopting standard multiple regressions and multi-collinearity tests in Victoria; consistent with Yan, Terheggen, and Mithofer [30] asserting that distance between farmers' locations and nearest village market negatively affect village-level food price, utilizing a multiple regression analysis for small-scale farmers in Southwest China; consistent with Le Cotty, d'Hotel, and Ndiaye [31] claiming that market remoteness measured by distance, i.e., transport costs, has a positive effect on food price volatility, relying upon an autoregressive conditional heteroskedasticity model in Africa; and consistent with Iregui and Otero [32] suggesting that for traded food products, distance is negatively associated with the speed of food price adjustment to the long-run equilibrium, utilizing a pairwise approach to testing for spatial market integration in Colombia.…”

Section: Theoretical Underpinningsmentioning

confidence: 72%

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Disease Outbreak, Health Scare, and Distance Decay: Evidence from HPAI Shocks in Chinese Meat Sector

Duan

Tao

et al. 2020

IJERPH

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Background: During zoonotic disease shocks (ZDSs), zoonotic disease outbreaks (ZDOs) can induce public health scares (PHSs), causing meat price risks (MPRs). Nevertheless, spatial spillovers of zoonotic disease shocks in meat markets remain unclear. We explore how zoonotic disease outbreaks and public health scares locally and spatially spill over to meat price risks, and whether spatial spillovers of public health scares decay with distance. Methods: (i) We construct a long panel covering 30 provinces and 121 months, using highly pathogenic avian influenza (HPAI) epidemics as exogenous shocks in Chinese meat sector. (ii) We decompose zoonotic disease shocks into zoonotic disease outbreaks (objective incident) and public health scares (subjective information) and examine their spillovers to meat price risks. (iii) We identify distance-decaying spatial spillovers of public health scares, by running our dynamic SAR models 147 times, from 80 km to 3000 km with 20 km as incremental value, in a setting with risk-level heterogeneity. Results: (i) Zoonotic disease outbreaks themselves only cause local and neighboring meat price risks for high-risk meat, not for low-risk or substitute meat. (ii) Public health scares exacerbate local and neighboring meat price risks for high-risk and low-risk meat, and local meat price risks for substitute meat. (iii) Spatial spillovers of public health scares are distance-decaying and U-shaped, with four spatial attenuation boundaries, and distance turning point is shorter for high-risk meat (500 km) than for low-risk meat (800 km). Conclusions: We complement the literature by arguing that health scares induced by disease outbreaks negatively spill over to meat prices, with U-shaped distance-decaying spatial effects. This suggests low interregional spatial market integration in meat products, due to distance decay of nonstandardized information and local government control effects, across provincial boundaries. To the best of our knowledge, we are the first to document nonmonotonic distance decay of health scare effects on food prices, previously not found by the literature.

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Section: Theoretical Underpinningssupporting

confidence: 63%

Section: Theoretical Underpinningsmentioning

confidence: 72%

Disease Outbreak, Health Scare, and Distance Decay: Evidence from HPAI Shocks in Chinese Meat Sector

Duan

Tao

et al. 2020

IJERPH

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“…(iii) Food price spatial analysis. Using a pairwise approach based on CPI (consumer price index) data for 153 goods, Iregui and Otero [20] find that food spatial market integration is more significant in unprocessed food products than in processed foods, other traded products, and nontraded products, and apart from nontraded products, the speed of food price differentials adjustment decreases with distance. Based on the international food trade network, Distefano et al [21] analyze food spatial price dispersion and stochastic price distribution, finding that food spatial bilateral price dispersion is significant and continuous, indicating failure of the LOP; food price discrimination and food spatial price dispersion can be distinguished; and food price spikes and food price peaks are typically strongly correlated, leading to more severe food market fragmentation and food price discrimination in the wake of food price crises.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Food Safety Incident, Public Health Concern, and Risk Spillover Heterogeneity: Avian Influenza Shocks as Natural Experiments in China’s Consumer Markets

Tao

Zhu

et al. 2019

IJERPH

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Background: Food safety incidents have aroused widespread public health concern, causing food price risk. However, the causal paths remain largely unexplored in previous literature. This paper sets out to identify the relations of local and spatial spillovers of food safety incidents and public health concerns to food price risk in consumer markets within a setting with heterogeneous food safety risk levels. Methods: (i) Theoretically, unlike prior work, this paper decomposes food safety risks into food safety incidents (objective incident component) and public health concern (subjective concern component). This article develops a theoretical framework of causality to capture the underlying causal pathways motivated by the theories of limited attention and two-step flow of communication. (ii) Empirically, using avian influenza shocks in China’s poultry markets as natural experiments, this paper differentiates between low- and high-risk food and incidents. The article adopts dynamic spatial panel models to analyze potential nonlinearity, moderation, and mediation in the spillover of food safety risk to food price risk for a long panel of 30 provinces covering the November 2007 to November 2017 period. Results: (i) Food safety incident alone only triggers high-risk food price risk, not low-risk food price risk. (ii) Public health concern amplifies nonlinear food price risk triggered by food safety incident. (iii) High-risk incident intensifies negative pressure of public health concern on food price risk. (iv) Food safety incident indirectly affects high-risk food price risk through public health concern. Conclusions: Using a setting with heterogeneous risk levels, this paper documents that (i) food safety incident itself does not necessarily determine food price risk, whereas it is actually public health concern that directly causes nonlinear food price risk; (ii) public health concern spillover to food price risk is negatively moderated by high-risk incident, and (iii) food safety incident spillover to high-risk food price risk is mediated by public health concern. The findings complement current research by (i) elucidating the diverse impacts of food safety incident and public health concern on food price risk, which are obscure in previous literature, and (ii) highlighting that heterogeneous food and incident risk levels matter for determining food price risk spillover.

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“…Con esta metodología se ha encontrado evidencia de integración en los mercados de arroz, trigo, maíz y otros alimentos en diversos países. 1 En particular, los estudios de Iregui y Otero (2011, 2013, 2017 y Neira-García et al (2016) presentan evidencia de integración en los mercados de alimentos perecederos en Colombia. Esta integración es más fuerte entre mercados menos distantes entre sí y en productos más perecederos como el tomate (Iregui y Otero, 2017, 2013.…”

Section: Introductionunclassified

Abastecimiento y costos de transacción en los mercados de alimentos de las principales ciudades de Colombia

Gáfaro¹,

Ojeda-Joya²,

Poveda-Olarte³

2020

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Testing for spatial market integration: evidence for Colombia using a pairwise approach

Cited by 9 publications

References 23 publications

Disease Outbreak, Health Scare, and Distance Decay: Evidence from HPAI Shocks in Chinese Meat Sector

Disease Outbreak, Health Scare, and Distance Decay: Evidence from HPAI Shocks in Chinese Meat Sector

Food Safety Incident, Public Health Concern, and Risk Spillover Heterogeneity: Avian Influenza Shocks as Natural Experiments in China’s Consumer Markets

Abastecimiento y costos de transacción en los mercados de alimentos de las principales ciudades de Colombia

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