Abstract
Regional market integration in many agricultural commodities has been extensively studied for the insight it provides into the functioning of such markets; such studies provide valuable information about the dynamics of market adjustments, and whether there exist market imperfections, which may justify government intervention. This study used Monthly wholesale prices (Rs. /40 kg) data from January 1995 to December 2003 of Basmati Rice (108 observations) in logarithmic form and empirically estimated the degree of integration in Rice (Basmati) markets of Pakistan's Punjab using the law of one price (LOP) framework and cointegration analysis. Cointegration Results show that all Rice markets are highly integrated in the long run. The high degree of market integration observed in this case is consistent with the view that Punjab's Rice markets are quite competitive and provide little justification for extensive and costly government intervention designed to improve competitiveness to enhance market efficiency. Keywords: Market integration, cointegration, rice prices, Punjab
