THE EXTENT OF THE WORLD COFFEE MARKET

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-8586.2009.00318.x Byline: Atanu Ghoshray (*) Keywords: ESTAR; extent of the market; non-linear adjustment Abstract: ABSTRACT This paper employs a novel method to determine whether the prices of various types of coffee are co-integrated. In the spirit of Stigler's arbitrage definition of the market, an attempt is made to test whether all the prices co-integrate in pairs, implying that there is a single market for coffee. This test for co-integration is carried out using both linear and non-linear approaches. This finding demonstrates that the conclusions drawn from the linear and non-linear tests may be drastically different. Author Affiliation: (*)Department of Economics and International Development, University of Bath, UK Article note: Correspondence: Department of Economics and International Development, University of Bath, Claverton Down, Bath BA2 7AY, UK. Tel: +44-1225-386402; Fax: +44-1225-383423; Email: a.ghoshray@bath.ac.uk.