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Spatial Price Analysis Incorporating Rate of Trade: Methods and Application to United States–China Soybean Trade

Published online by Cambridge University Press:  26 January 2015

Shengfei Han  and
Catherine A. Durham
Shengfei Han
Affiliation:
Department of International Business and Economics, South China University of Technology, Guangzhou, China
Catherine A. Durham
Affiliation:
Department of Agricultural and Resource Economics, Oregon State University, Portland, Oregon
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Abstract

A regime-switching model for analysis of market integration has been developed that incorporates rate of trade information. An application of the methods to United States–China soybean trade demonstrates that the extended trade information allows better interpretation of market conditions. While the empirical results show that China's reform efforts since mid 1990s toward an open market have greatly improved United States–China soybean markets integration, about 40% of nontransitional disequilibrium occurrences likely indicate infrastructural limits such as the lack of information availability and limited competition. The United States–China price linkage is observed to be closer after China's World Trade Organization membership. The link has also been found relatively slack during the South American soybean harvest.

Keywords

Chinafutures marketsmarket integrationregime switchingsoybeansWorld Trade OrganizationF15G13Q11
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 42 , Issue 2 , May 2010 , pp. 367 - 382
Copyright
Copyright © Southern Agricultural Economics Association 2010

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