Proximity and price co-movement in West African rice markets

We have explored the link between proximity and price transmission in rice markets, where proximity is captured using variables for geographic, political and cultural distance. Linear and threshold cointegration was tested for 351 rice market pairs in six West African countries, with threshold specifications accounting for transaction costs. The influence of proximity on price transmission is estimated in a subsequent multinomial logistic regression. The results provide evidence of a robust and statistically significant link between the strength of price transmission and measures of proximity such as distance, international borders, contiguity and a common language. We conclude that proximity matters for market integration processes in West African rice markets.