Spatial price transmission: A study of sheep markets in Sudan

Recent research in low-income countries has shown that high transfer costs and marketing margins may hinder the transmission of price signals, as they may prohibit arbitrage. Oligopolistic behavior and collusion among domestic traders may retain price differences between markets at levels higher than those determined by transfer costs and hinder the full price transmission and market integration (Rapsomanikis et al., 2003). This paper investigates price movements among important sheep markets in the Sudan to explore their performance and pricing efficiency. Six geographically separated livestock wholesale markets are tested spatially, using Johansen’s cointegration test (1988) and time-series price data for the period 1990–2004. Spatial analysis of the whole dataset indicates the absence of cointegration among the selected markets, while a subset of the data, for the period 2000–2004, after some infrastructural facilities were introduced, shows that the same markets are cointegrated.