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[Integration of livestock markets is important for stabilizing livestock prices, allocating resources, and alleviating market imperfections to improve market efficiency. It has been shown that market integration has a considerable effect on the successful design of agricultural price stabilization policies and in improving food security and the welfare of producers and consumers particularly in highly diverse and vulnerable countries like Ethiopia. Using a time varying threshold autoregressive model, this study contributes to literature by studying the spatial livestock market integration in Ethiopia. The results show that although there is a statistically significant improvement in market integration over the studied time period (2001–2018), regional livestock markets in Ethiopia are not fully integrated with the central market (Addis Ababa). This affects (based on economic theory), improvements by producers, consumers, and traders’ welfare which can be improved by investments. However, the study also finds that the transaction costs for all livestock types reduced over the study period, but the deviation from the equilibrium was still far from short. Policy options that aim to reduce bottlenecks in livestock market integration like policies that lead to a reduction in transaction costs, should be implemented to improve integration in the livestock market.]
Published: May 28, 2020
Keywords: Market integration; Threshold autoregression model; Livestock; Ethiopia; Q11; Q13; C22
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