Keywords
Co-integration
Price transmission
Cowpea
How to Cite
Abstract
The study investigated spatial market integration and price transmission of cowpea in Nigeria. Secondary data on monthly basis for wholesale cowpea price per kilogram were used for the study. Augmented Dicky Fuller Test, Johansen Co-integration model, Granger Causality Test and Variance Decomposition of Vecto Autoregressive Model and Error Correction Model were used as analytical tools. Augmented Dickey Fuller test revealed that first difference all the price series were stationary and lag one (1) is the optimum lag length appropriate for the specified variables. Cointegration test results of the markets proved that despite that these markets were spatially separated geographically, they were connected in terms of price transmission across them, both in the long and short run but the level of integration is weak. It was observed that price changes are temporary and would converge to an equilibrium within a given time span. Granger causality test results indicate that one pair showed bi-directional causation between Bauchi and Enugu States. Thirty two (32) links showed unidirectional and three (3) pairs such as Niger→Abia, Niger→Lagos and Sokoto→Cross River States pairs showed no causal relationship between them. The study showed that Gombe and River States cowpea price had a faster speed of adjustment to equilibrium than other states. It also revealed that that 1% increase in Jigawa State will result to 20.5% increase in Enugu state and 1 % increase in River State will lead to 40.6% and 64.8% increase in Gombe and Nasarawa States in the short run respectively. The study concluded that, there is integration between the cowpea prices of source and destination states, but the degree of integration is weak. It is recommended that market participants should adopt standardize trading, settlement practice and invest in technology (electronic trading platform) to reduce operational inefficiencies in different markets to support integration.
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