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Pricing efficiency in small regional markets : the case of feed grains in the Maritimes

This thesis examines the efficiency of the price discovery mechanism in small regional markets utilizing the feed grain markets in the Maritime Provinces of Canada as a case study. Through the application of the Law of One Price (LOP), price transmission symmetry and Vector Error Correction Models (VEC), the author determined the price relationships that exist between the feed grain market in the Maritime Provinces and those in Western and Central Canada as external sources of supply. / The results suggest that there exists a relatively high degree of arbitrage between Maritime feed grain prices and those of Thunder Bay or Chatham for equivalent quality, price transmission being strictly from West to East. Although the LOP hypothesis must be rejected in the short run, in most cases, it was found to hold in the long run. Local markets appear to be highly integrated and price adjustment occurs within a period of four to six weeks, generally corresponding to the lead time of feed grain orders and transportation from Western Canada. A price transmission analysis found no evidence of the exercise of market power in the pricing of local grain. / In general, the pricing of local grains in the Maritimes may be judged as efficient considering that the lag in price response corresponds to the replacement period for Western grains.

Identiferoai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:QMM.22731
Date January 1995
CreatorsFroment, Gilles
ContributorsCoffin, H. Garth (advisor)
PublisherMcGill University
Source SetsLibrary and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada
LanguageEnglish
Detected LanguageEnglish
TypeElectronic Thesis or Dissertation
Formatapplication/pdf
CoverageMaster of Science (Department of Agricultural Economics.)
RightsAll items in eScholarship@McGill are protected by copyright with all rights reserved unless otherwise indicated.
Relationalephsysno: 001467877, proquestno: MM05552, Theses scanned by UMI/ProQuest.

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