Spatial market integration in the era of high food prices. A case of surplus and deficit maize markets in Kenya

摘要

Kenya, like most countries in the East Africa Region, has continued to be beleaguered by unabated high and volatile food prices. The government, in an effort to counter these challenges, has instituted various policies aimed at reversing the situation. This paper is aimed at examining spatial maize market integration in the presence of non-constant transaction costs and policies implemented. Findings indicate that market pairs close to each other were integrated, had a lower transaction cost and the price differential across markets were quickly corrected compared to markets further apart. Evaluation of the effects of policies on market integration shows the implementation of policies resulted in market distortion. The price difference between surplus and deficit markets were not corrected hence equilibrium was not achieved. When markets are poorly integrated, the price mechanism does not work and price signals cannot be transmitted thus allowing for efficient exchange of food products across spatial markets.