Spatial pattern of Russia’s market integration

ABSTRACT

This paper studies the integration of regional goods markets in Russia over the period 2001–19, analysing the law of one price. The analysis involves all pairs of country’s regions, which provides a comprehensive spatial pattern of market integration. The region pairs are classified as belonging to one of four groups: perfectly integrated, conditionally integrated, not integrated but tending towards integration (converging), and neither integrated nor tending towards integration. On average, a region is found to be perfectly and conditionally integrated with 48.7% of other regions and tending towards integration with 3.3% of them. Comparisons of the European and Asian parts of Russia and other considerations suggest that geographical reasons explain the pattern obtained only partially. Apparently, idiosyncratic features of regional markets play a main role in non-integration.

KEYWORDS:

• regional product market
• law of one price
• price convergence
• non-linear trend

JEL:

• L81
• R15
• R19

ACKNOWLEDGEMENTS

Helpful comments from the participants at the conference ‘Spatial Analysis of Socio-Economic Systems: History and the Current State’ (Novosibirsk, 2016) and the 3rd Russian Economic Congress (Moscow, 2016) are gratefully acknowledged. The suggestions of three anonymous referees improved the paper considerably.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author.

Additional information

Funding

This study was supported by the Ministry of Education and Science of the Russian Federation in the framework of large-scale research project ‘Socio-Economic Development of Asian Russia on the Basis of Synergy of Transport Accessibility, System Knowledge of the Natural Resource Potential, and Expanding Space of Inter-Regional Interactions’, Agreement no. 075-15-2020-804 of 2 October 2020 [grant no. 13.1902.21.0016].