Analysis of Market Integration: A Case of Sugar in Selected Markets in Kenya

Abstract

Market integration is one of the most important aspects that can be used to assess the impacts of market development and liberalization policies. In the study areas, there was thin knowledge whether the sugar markets were integrated or segmented. Therefore, this paper seeks to determine the existence of integration among the selected sugar markets. Secondary data was obtained for average monthly prices of sugar from January 2008 to December 2012. Data was analyzed using Co-integration model. The result revealed that road networks, communication networks, consumers’ purchasing power and the distance between the markets greatly influenced market integration. Based on the findings the policy implication was drawn to enhance sugar market integration in the study areas.

Key words: Co-integration model, market integration, selected markets