A Potato Market Integration Analysis for India

Abstract

We constructed co-integration relation and Engle-Granger type errorcorrection models for the wholesale potato markets of three Indian regions. In addition to the standard result of the existence of errorcorrection mechanisms in Indian potato markets, the chosen setting allows for inspection of how these market areas differ in their return to the co-integrating relation. The northern area differed from the other market relations studied with its slower return to equilibrium, 8.0-8.6 weeks compared to 5.0-6.3 weeks. The result may indicate that the Delhi and Agra markets are central playing grounds for speculators, speculators manipulating potato prices farther and longer time away from the natural price relation. Short-run or same-week elasticities between the markets studied ranged from 0.12 to 0.34. Long-run elasticities ranged from 0.55 to 1.11. Short-run effect has to be multiplied by approximately four to obtain the long-run effect.

Speculation in Delhi potato wholesale markets, 2007–2019: Causal connections of prices and arrival quantities

“…Complementing price forecasting developments (Chandran & Pandey, 2007;Salmensuu, 2018), the present study contributes to price behaviour analysis through locating speculation in price series by RWGCT. The capital city area observes weaker marketing efficiency and slower areal price integration (Dahiya et al, 2002;Salmensuu, 2017) comparing to other Indian potato markets, which invites speculation and price overshooting, and ensuing political unrest. In addition to speculation in potato prices, onion prices are causing concern in India.…”