A Study on the Market Integration of Agricultural Product Wholesale Markets in Korea: A Focused Relation Analysis of Prices in Agricultural Product Wholesale Market*

Purpose – In this study, we investigate the market integration function of agricultural product wholesale markets by analyzing the price determination power of individual markets that play a pivotal role in the distribution of agricultural products in Korea, and the relationship between prices among these markets. Design/Methodology/Approach – We analyzed nine central wholesale markets that play a key role in 32 agricultural product wholesale markets in Korea using the daily price data of six major items. For the analysis, the stability of time series data was reviewed through the Unit Root test, and the ability to determine their own prices was checked through variance decomposition, forecast error variance decomposition. Findings – The results show that the prices in the Garak Agricultural Product Wholesale Market, which accounts for 33.6% of all trade volume in all 32 agricultural products wholesale markets, have a remarkable impact on the prices in major central wholesale markets; thus, these markets, except for the Garak Market, lack their own price determination power for most items. Research Implications – Agricultural product wholesale markets in Korea are achieving market integration due to the relatively small land area, a trade method focusing on auctions in wholesale markets, and the real-time sharing of agricultural trade information owing to advancements in information and communication technology. Therefore, this study’s results are distinct from those of previous studies claiming that distance affects market integration.