Russia's Common Market Takes Shape: Price Convergence and Market Integration Among Russian Regions

36 Pages Posted: 24 Jul 2007

See all articles by Konstantin Gluschenko

Konstantin Gluschenko

Institute of Economics and Industrial Engineering, Siberian Branch of the Russian Academy of Sciences; Department of Economics, Novosibirsk State University

Date Written: June 22, 2006

Abstract

This paper analyzes the spatial structure of goods market integration in Russia, characterizing regions into three states: (a) integrated, (b) not integrated but trending toward integration, and (c) not integrated and not trending toward integration. Using time series of the cost of a staples basket across 75 regions of Russia for 1994-2000, I exploit a nonlinear cointegration relationship with an asymptotically subsiding trend to capture movement toward integration. The analysis suggests that 36% of Russian regions were integrated with the national market over 1994-2000, 44% were in the process of integrating with the national market, and 20% of regions were not integrated and not trending toward integration.

Keywords: market integration, law of one price, price dispersion, convergence, Russian regions

JEL Classification: C32, P22, R10, R15

Suggested Citation

Gluschenko, Konstantin, Russia's Common Market Takes Shape: Price Convergence and Market Integration Among Russian Regions (June 22, 2006). Available at SSRN: https://ssrn.com/abstract=1002579 or http://dx.doi.org/10.2139/ssrn.1002579

Konstantin Gluschenko (Contact Author)

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