Abstract
The intention of this study was to investigate whether the tuna fish markets in Sri Lanka were integrated to bring efficiency in the marketing system. The empirical analysis of this paper was based on time series monthly data of tuna fish prices in selected wholesale and retail fish markets in Colombo, Kalutara and Kandy during the time period of 2000 to 2004. The bivariate price series correlation and Engle-Granger test were used to analyze the market cointegration for Sri Lanka tuna fish markets. The Augmented Dickey Fuller (ADF) test was applied to test the stationary of the price series. To check the short run dynamics of fish markets the Error correction model was applied. The bivariate correlation coefficients for six selected market pairs ranged between 0.403 and 0.85. The highest correlation coefficient value (r) was observed from the market pair of Colombo and Kalutara retail markets. The lowest 'r' value was observed from the market pair of Colombo and Kandy wholesale markets. All the selected six tuna fish markets price series were found to be non-stationary when ADF test was carried out. The results revealed that the price series for tuna fish prices in the selected six markets were stationary after first difference. The cointegration test and error correction model revealed that all the selected tuna fish markets in Sri Lanka were integrated and showed short run stability. In this case the results revealed that the tuna fish markets in Sri Lanka were somewhat competitive. But, further, government intervention needs to improve competitiveness of tuna fish marketing and to enhance the market efficiency. DOI: 10.4038/sljas.v11i0.2220 Sri Lanka J. Aquat. Sci. 11 (2006): 21-26
Highlights
In a competitive market with free flow of information, the price difference between any two regions will be equal to or less than transport costs between the two markets
The results revealed that the price series for tuna fish prices in the selected six markets were stationary after first difference
The cointegration test and error correction model revealed that all the selected tuna fish markets in Sri Lanka were integrated and showed short run stability. In this case the results revealed that the tuna fish markets in Sri Lanka were somewhat competitive
Summary
In a competitive market with free flow of information, the price difference between any two regions will be equal to or less than transport costs between the two markets. A market would be distinguished by features such as large number of buyers and sellers, perfect knowledge about market conditions, homogeneity of product, and free mobility of buyers, sellers and product. A single price will prevail in all markets. Price differentials for a particular commodity arising from place, time and form difference would correspond closely to the costs incurred in providing the respective transportation, storage and processing facilities. The market will perform efficiently and there will be no scope for traders to make excessive profits. The pricing system would facilitate exchange and fully reflect the underlying supply and demand conditions (Ahamad and Habibullah 1994)
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