Seasonality and Market Spatial Integration Analysis (Case Study: Broiler Market in Iran)

Due to a lack of knowledge of the integration of broiler market in Iran and its important role in supply adjustment, price stability, and adoption of appropriate policies, a scientific study of: spatial market integration, the law of one price as well as seasonality plays an important role in economic researches. In this respect, the spatial market integration and the law of one price for broiler market with regard to the seasonality of price series in five provinces of East Azarbaijan, West Azarbaijan, Ardabil, Zanjan and Tehran were investigated (using wholesale price data) during 1998-2009. Thus, Seasonal Co-integration method was employed with an application of Seasonal Error Correction Model. The results of Seasonal Unit Root Test indicated that broiler price series follow seasonality in all the investigated markets. Seasonal co-integration test indicated that there are two common stochastic trends in these markets through which prices are adjusted. Research findings reveal that the law of one price cannot be confirmed in either of the long-term or biannual frequencies, they are not "fully" integrated, but the markets are "partially" integrated in either one of the mentioned frequencies.