Testing the Central Market Hypothesis: A Multivariate Analysis of Global Markets of Pistachios

The central market hypothesis is important in analyzing market integration, because it implies a specific market structure while avoiding a simultaneity problem. The aim of this study is to investigate the central market hypothesis for global markets of pistachio over the period of 1988 to 2013.In this study central market hypothesis was tested by Johansson method of integration. The results implied the existence of two markets for pistachios. The first market consists of Iran, United States of America and China, and second market contains Italy, Greece, Germany, Turkey, France and Luxembourg. The results of the first and the second markets indicate that Iran and Turkey acted independently and showed to be price leadership in their market respectively. The law of one price was also established on the markets. According to intense competition of America and China (especially America) with Iran, the role of government is to have appropriate policy in identifying the target markets, branding and encourage exports, in the global market. Acknowledgement : The central market hypothesis is important in analyzing market integration, because it implies a specific market structure while avoiding a simultaneity problem. The aim of this study is to investigate the central market hypothesis for global markets of pistachio over the period of 1988 to 2013.In this study central market hypothesis was tested by Johansson method of integration. The results implied the existence of two markets for pistachios. The first market consists of Iran, United States of America and China, and second market contains Italy, Greece, Germany, Turkey, France and Luxembourg. The results of the first and the second markets indicate that Iran and Turkey acted independently and showed to be price leadership in their market respectively. The law of one price was also established on the markets. According to intense competition of America and China (especially America) with Iran, the role of government is to have appropriate policy in identifying the target markets, branding and encourage exports, in the global market