Spatial price dynamics in the US vegetable sector

This study investigates price transmission in the US fresh vegetable market, considering four important vegetables: carrots, lettuce, onions, and potatoes. An asymmetric variable-threshold autoregressive (AvTAR) model was used to estimate price relationships between 40 pairs of terminal market vegetable prices, whereas the parity bounds model (PBM) was used to estimate the probability of 22 shipping point to terminal market pairs behaving efficiently. The estimated AvTAR models suggest market integration is higher for more perishable produce. Results for the PBM indicate that 18.2% of the markets studied had more than a 10% probability of behaving inefficiently, indicating that while the majority of markets behaved efficiently, there is room for improvement. The estimated thresholds have been suggested as an estimate of transport costs, but estimated thresholds often differ substantially from actual transport costs.