Fragmentation of Wholesale Rice Markets in India

This paper tests for market integration in 55 wholesale rice markets in India using monthly data over the period January 1970 â?? December 1999. The technique of Gonzalez-Rivera and Helfand (2001) is used to identify common factors across various markets. It is found that wholesale rice markets are considerably fragmented. A major reason for this is the excessive interference in rice markets by government agencies and barriers to internal trade. As a result it is hard for scarcity conditions in isolated markets to be picked up by markets with abundance in supply. A number of policy implications are also considered.