Files
Abstract
The analysis of market integration of agricultural commodities based
on price information are limited because the effects of transaction costs are not
considered in the adjustment process. The main objective of this paper was to
estimate the possible transaction costs impacts on market integration of beef cattle
between the states of Minas Gerais and São Paulo. It was estimated a Threshold
Vector Error Correction Model (TVEC model) using monthly price data for the
period from January 1972 to August 2005. The results indicated the presence of
threshold cointegration implying that transaction costs have important effect on
the price adjustment process.