Abstract
Spiraling prices of onions in India undermine the sustainability of current economic growth process and raised the question of price integration among the spatially separated markets. Co-integration test has been used to identify whether onion markets in India share a common linear deterministic trend and the law of one price holds true in view of rising prices in the recent past. The study sourced the wholesale daily prices of major onion markets across the country from January 2010 to March 2011. Augmented Dickey Fuller test statistic has been used to check the presence of a unit root in the time series data. Empirical results indicated the presence of unit root and a strong spatial integration between major markets. The study also confirms the law of one price in Indian onions. Key words: Co-integration, onion, law of one price.
Highlights
Onion (Allium cepa) is being used as a vegetable and spice for thousands of years by many cultures around the world, and it has immense medicinal and therapeutic value (Sendhil, 2012)
Chennai being a region of high consumption of onions with little production, the commodity has to be transported from different parts of the country
The results indicated a high degree of significant positive correlation between all the major onion markets that are spatially separated
Summary
Onion (Allium cepa) is being used as a vegetable and spice for thousands of years by many cultures around the world, and it has immense medicinal and therapeutic value (Sendhil, 2012). It is cultivated across different states in India for domestic consumption and international trade. Onion is a commercial crop in India, but the crises of 1998 and 2010 played spoilsport in the economy and the welfare of the producers (Sendhil, 2012).
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
