Goods Market Integration in Russia During the Economic Upturn
26 Pages Posted: 20 Jun 2008
Date Written: May 2008
This paper obtains an evolving pattern of goods market integration in Russia, considering the period of economic upturn, since the second half of 2000 through the end of 2007. In an integrated market, the price of a tradable good at any location is determined by the national market, not local demand. Based on this, the strength of dependence of local prices on local demands is used to detect and measure market segmentation. The costs of a staples basket across almost all Russian regions with a monthly frequency are used as the empirical stuff. The pattern obtained suggests that in the time span under consideration the degree of Russia's goods market integration was relatively stable, fluctuating around some level; no sufficient improvements or deteriorations were detected.
Keywords: market integration, law of one price, price dispersion, Russian regions
JEL Classification: P22, R10, R15
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