Market Emergence and Transition: Arbitrage, Transaction Costs, and Autarky in China's Grain Markets

16 Pages Posted: 31 Mar 2020

See all articles by Albert Park

Albert Park

University of Michigan at Ann Arbor

Hehui Jin

Stanford University

Scott Rozelle

Stanford University - Freeman Spogli Institute of International Studies

Jikun Huang

Chinese Academy of Sciences (CAS)

Date Written: February 2002

Abstract

Using trimonthly Chinese provincial grain prices from 1988 to 1995, we estimate a parity‐bounds model of interregional trade for four subperiods to characterize how multiple aspects of market performance change during the process of economic transition. For each period, we estimate the extent to which arbitrage opportunities are realized by traders, the transaction costs between location pairs, and the likelihood that regions do not trade. Trade restrictions cannot explain the pattern of uneven market development over time. Infrastructure bottlenecks, managerial incentive reforms, and production specialization policies, all were likely important factors affecting market performance.

Keywords: arbitrage, China, grain, integration, markets, transaction costs, transition, P320, Q130

Suggested Citation

Park, Albert and Jin, Hehui and Rozelle, Scott and Huang, Jikun, Market Emergence and Transition: Arbitrage, Transaction Costs, and Autarky in China's Grain Markets (February 2002). American Journal of Agricultural Economics, Vol. 84, Issue 1, pp. 67-82, 2002, Available at SSRN: https://ssrn.com/abstract=3564615 or http://dx.doi.org/10.1111/1467-8276.00243

Albert Park (Contact Author)

University of Michigan at Ann Arbor

Hehui Jin

Stanford University ( email )

Stanford, CA 94305
United States

Scott Rozelle

Stanford University - Freeman Spogli Institute of International Studies ( email )

Stanford, CA 94305
United States

Jikun Huang

Chinese Academy of Sciences (CAS) ( email )

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