The first European grain invasion: a study in the integration of the European market 1750-1870

This paper argues that market integration should be measured as σ-convergence over the largest possible sample of markets. It test this claim with an empirical analysis of the European market for wheat, rye and candles from the middle of the 18th century to the eve of the first globalization with a new data-base of more than 450 price series. Price dispersion remained constant until the outbreak of French wars, then it increased abruptly. It started to decline after the end of the war, and the process continued steadily until an all-time low in the 1860s. Domestic and international integration contributed in roughly the same proportion to integration in the long-run, but the latter were much more important to account for medium-term changes. The fall in cost of maritime transportation accounted for a substantial share of the price convergence in the second quarter of the 19th century. These results suggest that the level of integration was determined for most of the period by war and political event