Economics Research Institute Study Paper
Utah State University Department of Economics
The concepts of market integration and the law of one price are defined and select cattle markets are examined relative to these definitions using correlation, cointegration, and causality approaches. Cattle-Fax data on five cattle classes, distinguished by sex and weight, were examined over 12 market areas encompassing 19 states. All markets were found to be integrated to some extent, though only a portion perfectly integrated. The law of one price held most often in the lightweight (400-pound) heifers and least often in the heavy (800-pound) steers. The most dominant markets appear to be in the Southwest, with the least dominant markets typically found in the Northwest and Mountain States.
Muwanga, Gertrude S. and Snyder, Donald L., "Market Integration and the Law of One Price: An Empirical Comparison of Alternative Estimation Approaches" (1999). Economic Research Institute Study Papers. Paper 172.