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Abstract
We assess market integration and price transmission of perishable
agricultural produce in Sub-Saharan Africa by studying Ghanaian tomato markets
which are characterized by pronounced seasonality in production and trade flows.
We analyse the tomato markets of Ghana by simultaneously regarding its five
most important markets, Navrongo, Techiman, Kumasi, Tamale and Accra, in a
multivariate asymmetric price transmission framework. The estimation of the
model is based on a unique dataset and on a modified version of the Johansen
estimation procedure which is suitable for estimating such multivariate models.
We estimate the price transmission parameters for four regimes which are a
combination of the seasonal patterns in trade flows and asymmetries in the longrun
price equilibrium between the most important production region (Techiman)
and the most important consumption centre for tomatoes (Accra). We find strong
evidence for integration of the five markets. In general, price transmission appears
to be fast. Disequilibria mainly trigger price responses in the two production
regions of Navrongo and Techiman. The regimes are found to matter for the
whole system of tomato markets. Disequilibrium is shown to spillover between
the price relationships. Consequently, tomato markets in Ghana appear to be
integrated and function very well since price signals are rapidly passed through
the country.