Dynamics of Market Integration and Price Transmission in Tomato Crop: Evidence from India

The present study provides valuable insight into the dynamics of major producing and consuming tomato markets in India, highlighting the relevance of integration among the markets and transmission of the price behaviors with the help of different econometrics approaches, i.e., Cuddy – Della Valle index, Johansen co-integration, Granger causality test, Vector error correction model, and Impulse response function. The results of the investigation showed that the markets were well integrated. Moreover, there is integration among the markets in the long run, but there is no significant relationship between markets in the short run. Granger causality showed that a bidirectional causal relationship existed between Mandi-Kolar and Delhi-Mandi, and there is no causality between Solan-Mandi, DelhiSolan, and other markets with unidirectional relationships. The rate of adjustment of disequilibrium among market prices using the Vector Error Correction model was highest (35.25 per cent) in the Solan market. In contrast, Mumbai was the key market influenced by other markets. According to the impulse response function, the prices initially fluctuated when a degree of unit shock was given to markets. Still, after five months, prices started stabilizing in all the markets. These findings can be used to develop strategies for better managing tomato prices and arrivals in the studied markets. Further research and policy measures may be necessary to address the challenges of price volatility and market integration in the tomato sector.