Assessing a Feasible Degree of Product Market Integration: A Pilot Analysis

29 Pages Posted: 25 Jul 2007

See all articles by Konstantin Gluschenko

Konstantin Gluschenko

Institute of Economics and Industrial Engineering, Siberian Branch of the Russian Academy of Sciences; Department of Economics, Novosibirsk State University

Darya Kulighina

Novosibirsk State University

Date Written: April 19, 2006

Abstract

Perfect integration eludes the real world, so we suggest a realistic benchmark standard for judging the extent of market integration in various economies. We estimate the degree of integration in the US product market, widely acknowledged to be the most integrated among geographically large economies, so as to provide a reference for measuring Russian market integration. Prices for 27 grocery items across 29 cities of the United States in the first quarter of 2000 are used as empirical data. The estimated degree of integration turns out to be very close to values obtained for Russia for 2000. Apparently, market integration in Russia has in recent years moved toward conditions found in advanced market economies. The roles of other factors that could potentially cause segmentation of the US market are also analyzed.

Keywords: market integration, price dispersion, law of one price, United States, Russia

JEL Classification: F14, F15, L81, R1

Suggested Citation

Gluschenko, Konstantin and Kulighina, Darya, Assessing a Feasible Degree of Product Market Integration: A Pilot Analysis (April 19, 2006). BOFIT Discussion Paper No. 3/2006, Available at SSRN: https://ssrn.com/abstract=1002601 or http://dx.doi.org/10.2139/ssrn.1002601

Konstantin Gluschenko (Contact Author)

Institute of Economics and Industrial Engineering, Siberian Branch of the Russian Academy of Sciences ( email )

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HOME PAGE: http://pub.econom.nsu.ru/staff/chair_et/gluschenko/index.htm

Department of Economics, Novosibirsk State University ( email )

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Russia
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HOME PAGE: http://pub.econom.nsu.ru/staff/chair_et/gluschenko/index.htm

Darya Kulighina

Novosibirsk State University

2 Pirogova Street
Novosibirsk, 630090
Russia

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