This article analyses the effect of 10 years of 'liberalisation' policy on price integration in the Beninese maize market. The comparison of price series for two periods, before and after the policy change, shows that the expected positive effect is not confirmed by co-integration analysis. Though markets were, and are, integrated in the long run, the sluggish speed of adjustment has not improved, which is why observed price differences between market places are often larger than marketing costs can justify. We conclude that the liberalisation policies did not significantly affect maize market integration and that, therefore, more effective policy instruments are required in order to strengthen the competitive forces in the market.
- THRESHOLD COINTEGRATION
- PRICE LEADERSHIP