Studies On The Integration Of China's Apple Market

China's apple market has witnessed a transition from a planned economy to the market economy system since 1978, when market development and operation has been paid much attention and therefore research on China's apple market becomes increasingly urgent. How has been China's apple market operating in the past twenty years of economy reform? Many studies on China's agricultural product market in the transitional period indicate integration for most agricultural product in the long run but no integration in a short term. Most of these studies are to judge market integration by price information and argue that for markets at different areas a regional market can be regarded as an integrated one in a perfect competition environment if market price varies synchronously with time. However, this hypothesis has been challenged practically by the fact that the centralization of circulation is increasingly bringing about and spreading market power and that large circulation enterprises, like supermarket, have tremendous storage, profit margins to narrow, intercross allowance ability and price strategy with a survey of different product and markets. Hence, lip-deep disintegration of market prices cannot simply be attributed to governmental intervention or infrastructure construction. Market players may adapt themselves to the market by changing trade volume through their price strategies and price in short order does not follow fluctuation law in other markets. It is probably helpful to review market integration more comprehensively by studying market integration from the changing price and quantity of product. This is a general issue involving apple market and thus has universally significance.Based on the early studies of some economists and taking into consideration apple's own market environment and circulation characteristics against new situation, studies on China's apple market in this paper will focus on the following issues: i.Does a long or short term integration exist among the markets of China's main apple producing provinces? ii.Do long or short term integration relationships exist among provincial apple markets? How does its price fluctuation influence each other? What features apple market has in circulation? iii.Does the formation and expansion of market power increasingly resulting from the concentration of apple circulation have any real impact on the method to verify market integration by price? iv.What are the main factors affecting the present apple market integration?On the basis of analysis of some concerned theories, this paper conducts an in-depth study on the issues mentioned above by applying some methods such as co-integration test, the error correction model, Granger Causality test and Panel Data Models. This study consists of 10 chapters. Chapter I for Introduction is to present the background, issues to address, objectives and research hypothesis, describe study framework and technical route, and put forward the possibility of innovation and deficiency of the study. Chapter II is a brief overview of relevant research at home and abroad to introduce the theory of market integration, comprehensively analyze commonly used methods of studying market integration, summarize empirical study at home and abroad involving market integration and China's apple market and briefly review relevant research. Chapter III focuses on the theoretical framework of this study, giving details of the methods such as Panel Data Models, co-integration test, error correction model and Granger Causality test applied to the empirical study.Chapter IV analyzes current state of China's apple market, presents the physical supply, breed structure, regional distribution and consumption demand and international trade situation of our apples. Chapter V elaborates on the changes of apple circulation system and transportation development of China with a review of the evolution of apple circulation system and price management system of our country and a brief analysis of the main factors affecting apple prices while detailing the development and changes of apple's circulation channels, transportation and communication industry of China.The core component of this paper lies in Chapter 6 to Chapter 9. Chapter VI is an empirical research on the integration among the markets in a main apple producing province of China and argues that market price integration does exists in the long run, but the integration in a short term is not as much as that in a long term. The integration in a short term varies to some extent due to a lot of factors affecting the markets in the province. The realization of apple value has a significant impact on fruit growers' income at areas with a larger yield. The fruit growers are more concerned about and more sensitive to apple market prices. Chapter VII is an empirical research on the integration among China's provincial markets. Research results indicate that China's apple market tend to be integrated in the long run with the sound operation of the market mechanism and the completeness of infrastructure construction while short-term integration in prices is not so obvious due to a variety of factors such as transportation and relative stability of sale channels. As far as causality in China's apple market is concerned, supply market does not simply result in the changes of demand market affected by factors like trade quantity between apple markets. Either supply side or demand side may affect the changes of apple price of its counterpart. Chapter VIII is mainly to apply Panel Data Model to examine the overall operating efficiency of China's apple market and review the key characteristics of apple circulation from the point of cobweb model. Judging from the time series, for those main apple production provinces apple production serves prominently as a pillar industry in local economy, where fruit growers are sensitive to apple market prices and price signal is transmitted in an efficient way. However, features of apple production put its growers at risk because of the objective laws of apple growth. Supposing transport & sales is smooth, there is no obvious correlation between apple yield and market price at different areas, which shows that China's apple productive region is comparatively centralizing while sale region is apart. Cross-province circulation has thus become an important characteristic of China's apple supply.Chapter IX consists of comparison and analysis of market integration of different channels. The results show that both long-term integration and short-term integration exist in the Public markets of Nanjing and Yantai respectively while not short-term integration but long-term integration exists between Nanjing Suguo Supermarket and Yantai's public markets; there is mutual causality between the prices of Yantai and Nanjing's public markets in a short period but no such obvious relationship between supermarkets of the two cities. It's an inevitable objective trend for the centralization of circulation, the reduction of the number of market subjects and the growth of market power. The fluctuations of product prices in a short term do not follow the price fluctuation laws in other markets due to the voluntary choice of market subjects and the degree of price integration may be decreased.Chapter X is a brief summary. A research conclusion is drawn from the results of empirical research and some rational policy recommendations are put forward from the perspective of enhancing efficiency in the operation of the market.