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Abstract
This paper examines the determinants of price differentials across 79 districts in Uganda. It identifies the main
production areas for key agricultural commodities and consumption destinations. In the framework of the law
of one price, the paper examines the hypothesis that spatial price differentials are at least partly influenced
by transportation and other transaction costs, infrastructural constraints, productivity and commodity output
shocks and the purchasing power of households. This is done through an estimation of the determinants of price
differentials of commodities across districts. The study notes the wide range of price differences across the country,
which, to a large extent, can be attributed to the interaction between remoteness and physical infrastructure. The
effect of per capita income on price differentials is relatively uniform across commodities. The findings point to
the importance of strengthening the capacities of farmers and their productivity as a means of improving their
livelihoods and fostering more efficient markets with faster supply responses to changes in prices. The findings
further emphasize the significance of spatial dimensions and infrastructure conditions in Uganda, thus suggesting
that infrastructural development must be a focus to reduce price differentials in the country.