SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS DECEMBER 1991 MARKET STRUCTURE AND SPATIAL PRICE DYNAMICS

Abstract firm or industry data and has not looked at the effect A method was developed with time series models of market structure on prices in subregions. to test hypotheses about the relationship between Several recent papers have used time series mod-market structure and spatial price dynamics. Long- els to study the speed and direction of dynamic run dynamic multipliers measuring the magnitude adjustments of prices across locations (e.g., Spriggs of lagged adjustment for spatial milled rice prices et al.; Brorsen et al.). Researchers have only been were calculated from the time series model and used able to investigate whether the prices in one location as the dependent variable in a regression model that lead or lag those in another. They then could only included a number of factors expected to influence speculate about why prices adjusted sooner in one price determination. Results show that price adjust- location than in another. For example, Spriggs et al. ments were slower as regional submarket concentra- argued that market structure could explain why tion increased and were faster in the regions with a wheat prices in the larger U.S. market tended to lead higher market share. Arkansas, the state with the prices in the smaller Canadian market. Past re-largest market share, was consistently a price leader. searchers using time series models were unable to test hypotheses about the reasons prices in one mar