Cointegration for Potato Market in Tamil Nadu-An Economic Analysis

This paper has analysed market integration in four regional markets located in Tamil Nadu, Uttar Pradesh, Madhya Pradesh and Gujarat. The study has observed that a bidirectional relationship exits Tamil Nadu and Gujarat potato markets. The changes in market prices of potato in these states significantly affect each other in the short-run. In the long-run, all the markets will have equilibrium adjustment, indicating that there would be a co-integrating relationship among the potato markets in the selected states. Specifically, in Tamil Nadu market, the speed of adjustment towards equilibrium arose by almost 0.2 per cent. The outcomes have confirmed that Gujarat market would significantly affect the potato market in Tamil Nadu. A increase in the price of potato in Gujarat markets would cause a higher price for potato in Tamil Nadu. Therefore, adequate precautionary measures will have to be undertaken to overcome the shortage in arrivals and increase in price of potato. The state should make efforts to increase potato production and storage facilities in a time bound manner.