Global food prices are typically analysed in a time-series framework. We complement this approach by focusing on the spatial price dispersion of the country-pair bilateral trade in the international food trade network (IFTN), for ten relevant commodities. The main purposes are to verify if the Law of One Price (LOP) holds and to investigate the emergence of randomness in the price-formation mechanism. We distinguish between the “internal” variance, which indicates the magnitude of price discrimination, and the “external” variance, that is a measure of price dispersion. We find that, for some commodities, spatial price dispersion is remarkable and persistent over time (i.e., failure of the LOP) and that there exists a strict correlation between price spikes and peaks in spatial price variability. We test whether the price distribution can be replicated through a stochastic process of extraction. Surprisingly, the actual distribution of prices, for several commodities, is well described by a random distribution. Then, the process of data aggregation is not neutral because the information at the micro-level scale might be lost at the macro-scale, due to the complexity of the IFTN. Finally, we discuss some possible economic explanations of these outcomes and the main methodological, environmental, and policy consequences.

Spatial Distribution of the International Food Prices: Unexpected Heterogeneity and Randomness / Distefano T.; Chiarotti G.; Laio F.; Ridolfi L.. - In: ECOLOGICAL ECONOMICS. - ISSN 0921-8009. - ELETTRONICO. - 159:(2019), pp. 122-132. [10.1016/j.ecolecon.2019.01.010]

Spatial Distribution of the International Food Prices: Unexpected Heterogeneity and Randomness

Distefano T.;
2019

Abstract

Global food prices are typically analysed in a time-series framework. We complement this approach by focusing on the spatial price dispersion of the country-pair bilateral trade in the international food trade network (IFTN), for ten relevant commodities. The main purposes are to verify if the Law of One Price (LOP) holds and to investigate the emergence of randomness in the price-formation mechanism. We distinguish between the “internal” variance, which indicates the magnitude of price discrimination, and the “external” variance, that is a measure of price dispersion. We find that, for some commodities, spatial price dispersion is remarkable and persistent over time (i.e., failure of the LOP) and that there exists a strict correlation between price spikes and peaks in spatial price variability. We test whether the price distribution can be replicated through a stochastic process of extraction. Surprisingly, the actual distribution of prices, for several commodities, is well described by a random distribution. Then, the process of data aggregation is not neutral because the information at the micro-level scale might be lost at the macro-scale, due to the complexity of the IFTN. Finally, we discuss some possible economic explanations of these outcomes and the main methodological, environmental, and policy consequences.
159
122
132
Distefano T.; Chiarotti G.; Laio F.; Ridolfi L.
File in questo prodotto:
File Dimensione Formato  
Spatial Distribution of the International Food Prices - Ecological Economics 2019.pdf

Riservato

Dimensione 2.19 MB
Formato Adobe PDF
2.19 MB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in FLORE sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2158/1284408
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 7
  • ???jsp.display-item.citation.isi??? 6
social impact