Global Market Integration in a System Composed of Local Markets
Pajot, Stéphane
Global Market Integration in a System Composed of Local Markets - 2003.
93
Apart from trivial situations of zero or total participation of the population in exchanges, the analysis of market integration is a tricky problem. It leads one to assume a certain form of homogeneity, which is not acceptable in the characteristics of local markets and/or in the structure of their relations. Percolation theory, which studies heterogeneous and disordered systems, provides a new approach for this kind of problem. Hence, through numerical simulations of an economic model of local exchange on a network structure, the market integration of the global market appears to be defined by the percolation threshold. Below the threshold, the large dispersion of prices is equivalent to the segmentation phase of the global market. Above the threshold, the small dispersion of prices is associated with the integration phase of the global market.Classification JEL: D4, F15, L11.
Global Market Integration in a System Composed of Local Markets - 2003.
93
Apart from trivial situations of zero or total participation of the population in exchanges, the analysis of market integration is a tricky problem. It leads one to assume a certain form of homogeneity, which is not acceptable in the characteristics of local markets and/or in the structure of their relations. Percolation theory, which studies heterogeneous and disordered systems, provides a new approach for this kind of problem. Hence, through numerical simulations of an economic model of local exchange on a network structure, the market integration of the global market appears to be defined by the percolation threshold. Below the threshold, the large dispersion of prices is equivalent to the segmentation phase of the global market. Above the threshold, the small dispersion of prices is associated with the integration phase of the global market.Classification JEL: D4, F15, L11.
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