Spatial Price Dynamics in the U.S. Vegetables Sector

This article investigates price transmission in the U.S. fresh vegetable market, considering the top five vegetables consumed: carrots, lettuce, onions, potatoes, and tomatoes. An asymmetric variable-threshold autoregressive model (AvTAR) was used to estimate price relationships between 54 terminal market pairs, while the parity bounds model (PBM) was used to estimate the probability of 28 shipping point to terminal market pairs behaving efficiently. Results for the AvTAR model provide evidence that the level of perishability positively impacts the level of market integration and of increasing transaction costs among nearly 70% of the markets studied. Results for the PBM indicate that 18% of the markets studied had more than a 10% probability of behaving inefficiently, indicating that while the majority of markets behaved efficiently, there is room for improvement. The estimated thresholds have been suggested as an estimated of transport cost, but estimated thresholds often differ substantially from actual transport costs.