Market Integration and Price Transmission in Major Onion Markets

Abstract

Onion is a bulky, perishable and politically sensitive vegetable, and its prices in India swing sharply between seasons and between markets. Whether a shock in one wholesale market is passed on to others, how quickly, and how completely, matters to growers, traders and the officials who decide on stock limits and export rules. This narrative review examines how market integration and price transmission have been defined and measured, and what the published work suggests for major onion markets. It draws on the econometric literature on unit roots, cointegration, error-correction and threshold models, on studies of asymmetric transmission, and on research on information, transport and trade policy in agricultural markets, and it reports no new price data. The main finding is that conclusions depend heavily on the method chosen, on whether prices are daily, weekly or monthly, on how markets are grouped in space, and on whether policy interventions such as export bans and stock limits are treated as structural breaks. Data quality, missing observations and the inability to separate transfer costs from market power add further doubt. Integration is best regarded as a matter of degree, and reports of strong or weak transmission should be read alongside the design that produced them. The review closes with a checklist for more transparent studies of onion and other perishable crops.