An econometric analysis of spatial market integration and price formation in the Namibian sheep industry
Date
2017-12
Authors
Ijambo, Bertha Deshimona
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
The Namibian government introduced the Small Stock Marketing Scheme (SSMS) for the
sheep market in 2004. The SSMS is a quantitative export restriction. Quantitative export
restriction policies decrease the tradable quantity of a commodity, and increases domestic
supply of a commodity, causing a lack of equilibrium in spatial markets. This, therefore,
has the capacity to hinder market integration. Moreover, a quantitative export restriction
disrupts the domestic supply and demand, and ultimately the equilibrium prices. A policy
such as the quantitative export restriction therefore determines the domestic price levels.
The effect of the SSMS on spatial market integration and price formation remains unclear.
A lack of empirical evidence on spatial sheep market integration and domestic price levels
can create challenges for policy makers. This is because a lack of evidence could prevent
policy makers from implementing evidence-based policies, which might buffer poor
consumers and producers from adverse price shocks, and lead to improved resource
allocation.
Description
Keywords
Market integration, price formation, government intervention, quantitative export restrictions, Namibia’s sheep market