Pork price transmission and efficiency in China

Based on monthly prices data from retail markets from 2000 to 2015, this article studies spatial transmission of piglet,hog and pork, and also the determinants and efficiency of pork price transmission in China. A vector error correction model (VECM) and stochastic frontier model are estimated.The estimated VECM shows that violations of spatial price equilibrium are corrected faster between provinces in close proximity. The stochastic frontier shows that price transmission is more efficient between provinces with closer distance, common borders , higher quantity of highway per capita and more production. The distance makes the highest contribution to pork price transmission efficiency, a 1 % change in distance between two provincial markets, a 9.33% growth in price transmission efficiency. We conclude that proximity matters for market integration processes in Chinese pork markets. Acknowledgement