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Abstract

This paper examines the cointegration of grain market prices in Northern Ethiopia. Results are based on bi-monthly retail price data on wheat and teff collected from six markets in the Tigray region of Northern Ethiopia. The data has 55 observations for each of the two crops in each of the six markets ranging over a period of May 2006 to October 2008. Johansen’s cointegration test reveals that most markets are cointegrated in wheat and teff retail prices. There is an indication that retail prices at Abi-Adi, a town located relatively farther away from the main asphalt road, is less integrated to other markets. This implies that infrastructural development is crucial for spatial market integration through market information transmission and physical transfer of goods from one market to another.

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