Market Integration and Relationship between Farm-Level Prices:Evidence from Cherry Markets in BC, Washington and California

摘要

An understanding of the behavior of farm-level cherry fruit prices has implications for tree fruit investment decisions and market development strategies.This paper investigates market integration, price leadership, and price formation in British Columbia (BC), Washington and California cherry markets over the period 1971-2011. Employing annual farm-level prices and Engle-Granger and Johansen co-integration/error correction techniques, this paper examines whether cherry prices have converged in BC, Washington and California during a period characterized by greater trade integration between Canada and the United States.Results show that BC and Washington markets are strongly integrated with a high degree of price transmission, while BC and California markets are partially integrated based on trends in total bilateral trade.The price formation analyses reveal BC fresh cherry prices are influenced significantly by their own per capita farm-level quantities and Washington per capita farm-level quantities.In contrast, Washington and California cherry prices are mainly explained by their own per capita farm-level quantities.