An Economic Analysis on Spatial Integration of Regional Rice Markets in Sri Lanka

This paper examines the impact of price originated in the Central Rice Market (i.e. Colombo) on the price formation in a set of geographically dispersed Regional Rice Market in Sri Lanka (i.e. Anuradhapura, Kandy, Kurunegala, Nuwara-Eliya and Pollonnaruwa). It uses the monthly retail prices of rice in these markets from January 1996 to December 2003. The outcome of the analysis suggests that prices in these markets, irrespective of the whether they are surplus or deficit markets, were highly integrated both in the short-run and long-run perspectives. It has important implications for food and agricultural policy, i.e. government interventions at the Central Market such as food imports and export bans etc. are effective in Regional Markets.

DOI: 10.4038/sjae.v8i0.1829

Sri Lankan Journal of Agricultural Economics, Vol. 8, 2006 pp.51-65