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Spatial integration and price transmission of chicken markets in Central Java, Indonesia
Dissertation Abstract:
The study analyzed the spatial market integration and price transmission, and proposed policy directions to enhance market efficiency of the chicken markets in Central Java Province, Indonesia for the period 2004–2009. Broiler and native chicken prices were increasing, especially during periods with religious activities. Broilers’ prices at the farm level fluctuated more than the wholesale and retail levels.
Augmented Dickey Fuller test results showed that there was sufficient evidence for the non-stationarity of prices in all market locations. However, differencing all prices at the first level resulted in a stationary process. Pearson correlation test showed a strong correlation between all market pairs indicating a higher degree of market integration.
Four to five market pairs showed Granger causality conditional at the farm, wholesale, and retail levels. However, only a unidirectional price transmission was observed among the market pairs.
The Law of One Price test results indicated there were four co-integrated market pairs in each market level. The effect of imposition of import tariff policy and road distance was found significant in increasing prices at the retail level.