Market Integration and the Law of One Price in Ghana

Using a new unique dataset on the prices of perishable commodities traded across several markets, and associated transport costs, we investigate the extent of market integration in Ghana and test the law of one price. We find some support for standard theory, conditional on the distance between markets in a developing country context. We use our data to estimate full transaction costs and to analyze the premium demanded by traders of specific commodities and for different destination markets.

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