Market integration in Mozambique: A non-parametric extension to the threshold model
A well-integrated market system is central to a well-functioning market economy (Dercon, 1995). As production decisions are based on observed prices, the most efficient allocation of resources would come about when prices represent scarcity conditions. In other words, a large network of markets connected by fast and efficient arbitrage is needed in order to exploit spatial comparative advantages (Fackler and Goodwin, 2001).