Product Aggregation, Market Integration, and Relationships between Prices: An Application to World Salmon Markets

TLDR

Relationships between prices of goods motivate the study of market integration and product aggregation, and the close link between these concepts enhances the usefulness of integration studies. The study aims to develop and illustrate the relationship between market integration and product aggregation through an application to the world salmon market. The authors apply this relationship to the world salmon market, analyzing price integration across five salmon species. They show that the Law of One Price holds for this international market, implying significant implications for product aggregation in demand analyses and international trade policy.

Abstract

Abstract Relationships between prices of goods offer motives of interest in at least two areas: market integration and product aggregation. There is a close relationship between market integration and aggregation, which may increase the usefulness of market integration studies. In this article, these relationships are developed and illustrated by an application to the world salmon market. It is shown that the Law of One Price holds for an international market with five salmon species. This result has significant implications for the world salmon market regarding both product aggregation in demand analyses and international trade policy.