Scandinavian Working Papers in Economics
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Institute for Economies in Transition, Bank of Finland BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland

No 7/2006:
Russia’s common market takes shape: Price convergence and market integration among Russian regions

Konstantin Gluschenko ()

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; (follow links to similar papers)

JEL-Codes: C32; P22; R10; R15; (follow links to similar papers)

36 pages, June 22, 2006

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This paper is published as:
Gluschenko, Konstantin, (2011), 'Price convergence and market integration in Russia', Regional Science and Urban Economics, Vol. 41, 2, pages 160-172

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