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Common Russian Market: Myth rather than Reality

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  • Glushchenko Konstantin
Abstract
This paper presents a theoretical argument that the relationship between price differences and per capita demand differences (approximated by per capita income differences) across locations can be used as a cross-sectional test of the law of one price. Since the relationship should be statistically insignificant or very weak in an integrated economy, its strength can measure the extent of market integration. Using this approach, the temporal pattern of Russia's internal market integration is characterized. The data used span 1992 – 1999, and cover most regions of the country; a number of consumer goods and aggregates are included in the analysis. The price-income relationship is found to be strong over the whole time span considered, thus indicating that the Russian market is not near to being integrated even in the present day. Nevertheless, integration tends to improve over time, though there are deviations from this tendency in 1997 and 1999. A number of culprits behind market fragmentation are identified, organized crime among them.

Suggested Citation

  • Glushchenko Konstantin, 2002. "Common Russian Market: Myth rather than Reality," EERC Working Paper Series 01-11e, EERC Research Network, Russia and CIS.
    • Handle: RePEc:eer:wpalle:01-11e
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    Cited by:

    1. repec:zbw:bofitp:2006_003 is not listed on IDEAS
    2. Konstantin Gluschenko, 2004. "The Evolution of Cross-Region Price Distribution in Russia," William Davidson Institute Working Papers Series 2004-716, William Davidson Institute at the University of Michigan.
    3. Tsuruta, Yoshitaka, 2008. "What affects intranational price dispersion?: The case of Japanese gasoline prices," Japan and the World Economy, Elsevier, vol. 20(4), pages 563-584, December.
    4. Konstantin Gluschenko & Darya Karchevskaya, 2010. "Assessing a feasible degree of product market integration: a pilot analysis," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 37(4), pages 419-437, September.
    5. Konstantin Gluschenko, 2005. "Inter-Regional Price Convergence and Market Integration in Russia," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(4), pages 483-483, November.
    6. Xinru Miao & Shaopeng Wang & Jiqin Han & Zhaoyi Ren & Teng Ma & Henglang Xie, 2024. "The Regional Heterogeneity of the Impact of Agricultural Market Integration on Regional Economic Development: An Analysis of Pre-COVID-19 Data in China," Sustainability, MDPI, vol. 16(5), pages 1-33, February.
    7. Gluschenko, Konstantin, 2006. "Russia's common market takes shape : price convergence and market integration among Russian regions," BOFIT Discussion Papers 7/2006, Bank of Finland, Institute for Economies in Transition.
    8. Glushchenko Konstantin, 2004. "Integration of the Russian Market. Empirical Analysis," EERC Working Paper Series 04-06e, EERC Research Network, Russia and CIS.
    9. Konstantin Gluschenko, 2003. "Market integration in Russia during the transformation years," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 411-434, September.
    10. Глущенко К.П., 2007. "Влияние Организованной Преступности На Региональную Дифференциацию Цен," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 43(2), апрель.
    11. repec:zbw:bofitp:2006_007 is not listed on IDEAS
    12. repec:lic:licosd:15204 is not listed on IDEAS
    13. Konstantin Gluschenko, 2009. "Goods market integration in Russia during the economic upturn," Post-Communist Economies, Taylor & Francis Journals, vol. 21(2), pages 125-142.
    14. Akhmedjonov, Alisher & Lau, Chi Keung, 2012. "Do energy prices converge across Russian regions?," Economic Modelling, Elsevier, vol. 29(5), pages 1623-1631.
    15. Gluschenko, Konstantin, 2006. "Russia's common market takes shape: price convergence and market integration among Russian regions," BOFIT Discussion Papers 7/2006, Bank of Finland Institute for Emerging Economies (BOFIT).
    16. Konstantin Gluschenko & Darya Karchevskaya, 2010. "Assessing a feasible degree of product market integration: a pilot analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 37(4), pages 419-437, September.

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    More about this item

    Keywords

    Russia; law of one price; market integration; price dispersion; Russian regions;
    All these keywords.

    JEL classification:

    • P22 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Prices
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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