metadata: authors: 0: author: Gardner, Bruce
1: author: Brooks, Karen M.
count: Russian Federation
docna: 0: docna: How retail food markets responded to price
            liberalization in Russia after January 1992
docty: Policy Research Working Paper
subtopic: State Owned Enterprise Reform,Public Sector Administrative & Civil
            Service Reform,Food Security,Inflation,Privatization,Energy Privatization,Transport Services,Democratic Government,Economics and Finance of Public
            Institution Development,Public Sector Administrative and Civil
            Service Reform,De Facto Governments,Commodity Risk Management
teratopic: International Economics and Trade
abstracts: cdata!: Under administered prices through the
            fall of 1991, Russia's food distribution system broke
            down, and it was feared that the food supply would be
            inadequate in the winter of 1992 and thereafter.  In January
            and March 1992, price ceilings were removed on most items
            sold in state-owned Russian stores.  Price liberalization
            was intended to return food to shelves and to improve the
            flow of food among regions through responses to price
            differentials.  Privatization of the distribution system did
            not begin until October 1992.  At the time of price
            liberalization the environment was still dominated by
            unrestructured state enterprises.  Retail prices immediately
            rose sharply and fluctuated.  Because food prices did not
            stabilize after the initial jump, many people questioned
            whether price liberalization accomplished anything positive.
            The authors examine data on movements in food prices and
            volumes between December 1991 and August 1992 to examine how
            retail food markets responded to liberalization.  They
            address the following questions. Is there any evidence that
            after liberalization food returned to retail outlets that
            were essentially bare in December 1991?  Is there evidence
            that transactions took place in response to price
            differentials (did markets begin to emerge despite the lack
            of privatization and demonopolization)?  Did city-to-city
            price differentials evolve to reflect a price surface
            explainable by transportation costs and other economic
            variables?  If not, why not?  The authors conclude that
            progress was made toward market integration in the seven
            months after price liberalization.  The volume of food sold
            in monitored shops increased substantially.  The geographic
            dispersion of prices declined over time.  But large price
            differences between cities persisted that cannot be
            explained in terms of available economic variables.  Large
            economic gains could be achieved by futher market integration.
geo_reg_key: 517208,517191,517190,82689,517198
repnme: repnme: How retail food markets responded to price
            liberalization in Russia after January 1992
display_title: How retail food markets responded to
            price liberalization in Russia after January 1992
listing_relative_url: /research/1993/05/699035/retail-food-markets-responded-price-liberalization-russia-after-january-1992
topicv3: Agriculture and Food Security m1326205 435,Transport m1326661 135,Inflation m1326709 0870F4727ACED1CF8525815C00471347,Privatization m1327236 1283,Commodity and Resource Prices m1503849 3034
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: International Economics and Trade
origu: Rural Development Department (RDV)
no_of_pages: 72
model_extractions: <!-- Start of picture text --> Polley Research<br>Agricultural Policies<br><!-- End of picture text -->

**WPS 1 140**

- This paper a product of the Agricultural Policies Division, Agriculture and Rural Development Department- is part of a larger effort in the department to analyze changes in agriculture in economies. This research was supported by a grant to the University of Minnesota from the National Council on Soviet and Eastern European Research, and by the World Bank. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Cicely Spooner, room N8-039, extension 32116 (May 1993, 66 pages).

Under administered prices through the fall of 1991, Russia's food distribution system broke down, and it was feared that the food supply would be inadequate in the winter of 1992 and thereafter. In January and March 1992, price ceilings were removed on most items sold in state-owned Russian stores. Price liberalization was intended to return food to shelves and to improve the flow of food among regions through responses to price diflrentials. Privatization of the distribution system did not begin until October 1992. At the time of price liberalization the environment was still dominated by unrestructured state enteiprises.

Retail prices immediately rose sharply and fluctuated. Because food prices did not stabilize after the initial jump, many people questioned whether price liberalization accomplished anything positive. Gardner and Brooks examine data on movements in food prices and volumes between December 1991 and August 1992 to examine how retail food market, responded to liberalization. They address the following questions: Is there any evidence that after liberalization food retumed to retail outlets that were essentially bare in December 1991? Is there evidence that transactions took place in response to price differentials (did markets begin to emerge despite the lack of privatization and demonopolization)? Did city-to-city price differentials evolve to reflect a price surface explainable by transportation costs and other economic variables? if not, why not?

Gardner and Brooks conclude that progress was made toward market integration in the seven months after price liberalization. The volume of food sold in mordtored shops increased substantially. The geographic dispersion of prices declined over time. But large price differences between cities persisted that cannot be explained in tenns of available economic variables.

Large economic gains could be achieved by further market integration.

**The Policy Research** Working **PaperSePresdissedbinates tP e indings of work under way** in **tSeBank. Anobjectiveof the series** is **to get these findings out quickly, even if presentations are less than fully polished.** .'he **findings. interpretations. and** conclusions in **these papers do not necessarily represent ofrficial Bank policy.**

**Produced by the Policy Research Dissemination Center**
# How Retail Food Markets Responded to Price Liberalization in Russia after January 1992

by Bruce Gardner and Karen M. Brooks
# Table of Contents

||Page|
|---|---|
|The Data ........................................................|2|
|Food Prices in 1992 .............................................|4|
|Price Differences Between Cities .........................................|11|
|Causes of City-to-City Price Differences .<br>...................................|16|
|Trends in Resi.ual Food Price Variation .<br>...................................|21|
|Regional Market Integration ...........................................|23|
|Conclusions ............................................|29|
|Appendix: Average Prices and Volume in Monitored Outlets of<br>19 Commodities in 132 Russian Cities .<br>...................................|31|
# How Retail Food Markets Responded to Price Uberalizatlon in Russia after January **1992**

# _Bruce Gardner (University of Maryland) Karen M. Brooks (World Bank and University of Minnesota)_

Food prices in Russian state-owned stores were freed from national regulation in two steps in January and March 1992. Some provinces and cities retained price regulation, and in some cases even dropped and then reintroduced it. But the main policy change occurred in January with removal of price ceilings on most items sold in state-owned stores. Retail prices immediately rose sharply and fluctuated. The price liberalization was intended as a first step toward creating active markets in the food sector. The liberalization preceded privatization and institutional reform not by design, but by exigency. Retention of administered prices throughout fall of 1991 had led to substantial breakdown in the food distribution system and concern about adequacy of food supply in winter 1992 and thereafter. The liberalization was intended to return food to shelves and to improve the flow of food among regions through response to price differentials.

Privatization of the distribution system, an important concomitan **t** o liberalization, did not begin until the launching of the voucher scheme in October 1992.1 Some retail outlets were privatized earlier through auctions and small-scale privatization, but these had little impact on -he monopoly power of ' This research was supported by a grant from the National Council on Soviet and East European Research to the University of Minnesota, and by te World Bank. The Center for Economic Analysis and Forecasting, Moscow, provided guidance in interpreting the data. The findings, interpreations, and conclusions expressed in tis paper are entirely hose of the authors and should not be attributed in any mnner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The presentation of material does not imply the expression of any opinion whatsoever on the part of the World Bank, its affiliates, or its Board or member countries concerning the legal status of any country, territory, city, or amr or of the authorities thereof or concerning the delimitation of its boundaries or its nationa! affiliation.

I Beginning in October 1992, all Russian citizens over the age of 18 were issued vouchers redeemable in the future against shares of state-owned enterprises.
processors and distributors. Thus the price liberalization of January and March 1992 took place in an environment dominated by unrestructured state enterprises.

Food prices moved up sharp:y after the January liberalization and subsequently continued to climb, although somewhat lagging the general price level, throughout 1992. The fact that food prices did not stabilize after the initial jump led many people to question whether liberalization accomplished anything positive. This paper uses data on movements in food prices and volumes between December 1991 and August 1992 to examine how retail food markets responded to liberalization. Is there any evidence that after liberalization food returned to retail outlets that were essentially bare in December 1991? Is there evidence that transactions took place in response to price differentials, i.e. did markets begin to emnerge despite lack of privatization and demonopolization? Did city to city price differentials evolve to reflect a price surface explainable by transportation costs and other economic variables? If not, why not? This paper attempts to answer these and related questions using data for January through August 1992.

# le Data

Goskomstat of the Russian Federation began an extensive effort to collect retail food prices in January 1992. These data are organized by the Center for Economic Analysis and Forecasting and evaluated to track price movements. A weekly survey covers 69 food and related commodities in 132 cities throughout Russia. Both state-owned stores and private central markets (collective farm markets) are covered, but not individual private sellers who generaliy buy at the former outlets for resale on the street in small quantities.

The survey is taken on Wednesday of each week, typically with one enumerator for each 3 or 4 state stores, and one enumerator for each private central market. Not all outlets are sampled, but the sample size appears adequate-about 70 enumerators in Moscow, for example, covering about 100 state 2
<!-- Start of picture text --> Average Prices, Potato<br>(December 1991 - August 1992)<br>25-<br>0- --- @---------Z------------ ----------<br>,.'<br>5' '4; ...--,,,,,---,-,,,,;;,,-,.-:.---- ,^@"""..................... ..................................<br>5 *eC91 01/28 02/11 02/25 031 0414 0428 05/12 0&02 06 6 030 07/14 07/28 Q8J11 0=i<br>Date<br>Market Price .... State Pfice<br><!-- End of picture text --> 3
stores and 10 collective farm markets. The enumerators record posted prices in state stores and ask the manager for volume data. In private markets the enumerators ask a sample of sellers for price quotes, and ask the market's administrator, or in jorne ?ases individual sellers for an estimate of volume sold in the market.

The data collecting agency uses the enumerators' reports to calculate for each commodity an average price in each city for state stores, an average price for collective farm markets, and estimated total volume for each type of market in the outlets surveyed. These data are then used to calculate an overall food price index for Russia. All-Russia price indexes for each commodity and for all food are published weekly.<sup>2</sup>

# Food Prices i__2

Tbis paper focuses on the behavior of 19 widely sold staple commodities, which comprise a subset of the 69 conunodities sampled: beef ("category 1") sausage ("type 1") sausage ("type 2") butter vegetble oil milk sour cream cheese (standard types) eggs sugar bread (rye) bread (white) millet groats vermicelli (spaghetti) potatoes cabbage onions apples cigarettes 2 Since the volume in sampled outlets does not by construction reflect the volume of transactions in state and private markets throughout Russia, the aggregate index uses adjusted weights instead of the volumes in the sample.

4
<!-- Start of picture text --> Volume in Monitored Outlets: Potatoes<br>(01/21192-08/12592)<br>220*<br>160- -----------. ...... , ^. .....................................<br>e S *~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~.*,.;.; ;;<br>; X 120- ~~~~~~~~....... . ..^........ ; 8............<br>40 a .*.* *:<br>. ................. .................................. 1.~~~~~~~~~~~~~~~~~~~~~~~~~~~01 ...... f -..-.--.-<br>20 .: * .. . . . . . . . . . . . . . . . . .<br>0121 02104 02/18 03t1 7 04u07 04/21 ositOs 05119 W os 06zz23 07/07 07z21 os o404' OS8<br>Date<br>- M arket V oltume .... State Volum e<br><!-- End of picture text -->

**_5_**
Figure 1 shows all-Russia prices of one of these commodities, potatoes. Potatoes, unlike most foods, were already sold at tz--regulated prices in state stores in December 1991, and most of the difference between state and free market prices reflect quality differences. The movement in potato prices after January 2, however, suggests that prices prior to that were controlled perhaps at the local level. Some of the price increase may be due to income escalators built into the January liberalization. Figure 1 plots the average price of potatoes from December 1991 through August 1992, in state stores and in private (collective farm) markets. The volume-weighted mean price of potatoes in the 132 cities surveyed was 1.48 rubles (per kilogram) in states stores in December 1991. After the liberalization of prices in January 1992, the price in state stores immediately increased to over 5 rubles per kilo.

No data were reported for potatoes in the private markets (the same is true for almost every ither commodity) until February 1992. Reported prices in these markets have been generally higher iz the private markets than in the state stores, but these prices were already deregulated and high in December 1991 (although we have no comparable price indexes to quantify how high private market prices were relative to state store prices in December 1991).

After the initial shock, prices rose more slowly during the first half of 1992 in both state stores and collective farm markets. Potato prices rose 'only' about 50 percent between February and July in state stores, and then quadrupled in July-August. Private market prices rose rapidly, and by August had converged so that state stores and private markets sold potatoes at about the same prices.

The volume of potato sales estimated for the markets sampled in the 132 cities is shown in Figure 2. The volume in state stores rose markedly after the liberalization, even though formally potato prices had been largely freed prior to January 1992. There was no concomitaa fall in volume on sampled private markets, and so total sales of potatoes increased initially, due presumably to reduction of inventories held within the distribution system. Overall, the state and private markets sampled had about 6
Figure **3.** 132-city **Price** Index for **All Food** <!-- Start of picture text --> dec91 =100 for both state and market<br><!-- End of picture text --> <!-- Start of picture text --> 2500<br>2000<br>1500-<br>1 000_<br>500 --<br><!-- End of picture text -->

> DEC91 02i04 02i25 04jO7 04i28 **05i19 061i6 07iO7** 07i28 **08i18 DATE**

> - - MARKET PRICE STATE PRICE
an equal volume of sales in February-August. In July and August, the state stores steadily lost sales. August volume in state stores was about one-fourth of their February volume.

For 17 of the 19 core commodities, sales volurie in the state sector increased following January 1992. The exceptions are eggs, for which the precipitous fall in volume, followed by roughly level sales thereafter, suggests a reporting mistake. The decline in cigarette sales in stores is sustsined after the original drop, suggesting that cigarette sales may have indeed moved out of the sampled stores, perhaps to sidewalk kiosks. For the remainder of items, the increase in volume in stace stores is not mirrored by a fall on private markets. These data support anecdotal reports that, after liberalization, fGio **d** id in fact return to shelves of state stores. Although the liberalization did little directly to promote reorganization of the trading system, this evidence suggests that the precipitous fall in volume that caused alarm in fall 1991 was halted and reversed in January and February 1992.

For several commodities-smoked sausage, butter, milk, cheese, 9ggs, sugar, bread, vermicelli-volume in the private markets remained low or negligible throughout January-August 1992. Other ptoducts were sold hAvily in the private markets. By August 1992 private market volume exceeded state-store volume for potatoes, apples, and beef in these sampled oudets. In most cases the private-market price substantially exceeded the price in state stores. Only for potatoes, cabbage, onions, and apples did the market and state-stor. prices tend to converge over time. (See Appendix for price and quantity charts for each of the 19 commodities.) Figure 3 shows a volume weighted price index for all 19 commodities (using February 4, 1992 quantity weights with December 1991 = 100 as a base period). Separate indexes were constructed for state-owned retail stores ("state price") and the collective-farm markets ("market price"). Market price data do not begin until the last week in January. The state-store price index rose sharply between December 1991 and January 1992, but not to the level of private market prices. Both indexes appear to have cvershot the deregulated equilibrium, so that the indexes fell in February. Subsequently, both 8
indexes rose steadily through 1992, with some convergence of the two toward a common level in the summer. It is notable that the second steps of deregulation, in March 1992, had only a small aprarent impact on food prices in general, although the impact on affected commodities was greater.

Table I compares the state-store price rise across commodities in two stages: the change in statestore prices between December 1991 and February 4, 1992, and the changes between February 4, 1992 and August 25, 1992. For example, the index value of 863 for beef in state stores on August 25, 1992 means the all-Russia average price of beef was 8.63 times the December 1991 price. The private market price changes are not shown because the December 1991 base is not available.

The right-hand column of Table 1 shows indexes of prices on August 25, 1992, with February 4 = 100. The value for beef of 133 means prices were 33 percent above February. The first and third columns show the initial shock effect of deregulation as compared to the effect of inflation over the following seven months. (Note that multiplying the first and third columns and dividing by 100 gives the second column. TIus, the first and third columns decompose the total price rise into two multiplicative components). The inidal shock is larger for the overall average, and for most commodities. But some products had a smaller inital price rise than the subsequent (February through August) increases: vegetable oil, milk, sugar, potatoes, cabbage, and onions. For vegetable oil, milk, and sugar, the larger February through August price rise reflects removal of price ceilings retained until March 1992. For milk and sugar, a fall in volume prior to March was reversed, at least temporarily, after the removal of ceDings.

To determine relative prices for a particular commodity, compare the commodity's price index with the all-commodity price index. For the whole period, the lowest price increases were for millet groats, onions, cabbage, apples, and beef. Seasonal factors may account for cabbage and onions, which were presumably being harvested by the end of August. The commodities whose prices rose most were sugar, bread, vermicelli, and cigarettes.

9
Table 1. Price indexes, state-owned stores.

|Commodity|December 1991 = 100<br>February 4, 1992<br>August 25, 1992|February 4, 1992=<br>100<br>August 25, 1992|
|---|---|---|
|Beef|651<br>863|133|
|Sausage 1|908<br>1730|191|
|Sausage 2|735<br>1249|170|
|Butter|774<br>1703|220|
|Vegetable oil|366<br>_1555_|425|
|Mi1k|315<br>1690|536|
|Sour cream|997<br>_1505_|_151_|
|Cheese|1620<br>3175|196|
|Eggs|824<br>1360|165|
|Sugar|473<br>3221|681|
|Bread 1|605<br>3146|520|
|Bread 2|410<br>2034|496|
|Millet groats|78<br>195|250|
|vermicelli|1350<br>2997|222|
|Potatoes|269<br>1264|470|
|Cabbage|245<br>715|292|
|Onions|210<br>502|239|
|Apples|362<br>_554_|153|
|Cigarettes|_500_<br>2220|444|
|All 19|501<br>1563|312|

Relative price changes have been very large. Between December 1991 and August 1992 the price of (high quality) bread relative to the price of beef more than tripled. The price of high quality bread relative to apples rose by a factor of almost six. These changes in relative prices reflect in part easing of mandated distortions embodied in the old admlnistered prices. Movements in reiative prices in the period immediately following liberalization are not fully explained in the current framework.

10
# Price Differences Between Cities

In an economy with well-functioning, integrated markets, prices for the same commodity would differ between cities only by tLe cost of transporting the product. The size of price differences between cities provide information about how Russia's food marketing system coped with the economic shocks resulting from deregulation. In December 1991, prices in state stores already varied considerably from city to city. For example, the reported price of potatoes varied from a low of 0.33 rubles in Kizel to 4.00 rubles in Yuzhno-Sakhalinsk, and the volume-weighted standard deviation of the price of potatoes across cities was 1.05 rubles.

The coefficient of variation, the standard deviation divided by the mean, is a useful indicator of price differences from city to city because it self-adjusts for inflation. For potatoes in December 1991, the 132-city mean price was 1.89 rubles, so the coefficient of variation is 1.05/1.89 - _.56._ A coefficient of variation declining over time indicates that price differences across cities are becoming relatively smaller. Table 2 indicates how the coefficient of variation changed during 1992 for each of the 19 commodities. All the coefficients of variation are 1u in February 1992 than before deregulation in December 1991. While commodity prices rose dramatically, by 500 percent on average (see Table 1), this rise was not a constant percentage across cities. It appears to have been closer to a constant increase in the ruble price. For this initial price shock, the city-t-city standard deviation of price may be a more meaningful measure. This measure is shown in Table 3.

11
Table 2. Coefficients of variation (xlOO) of commodity prices from city to city in state stores.

|Date|Beef|Sausage1|Sausage 2|Butt|Vegetable<br>oil|Milk|Sour<br>cream|_Caese_|Eggp|
|---|---|---|---|---|---|---|---|---|---|
|12/91|64|73|89|61|89|76|88|133|90|
|01/21|27|17|16|65|52|161|45|_54_|6|
|01/28|36|23|30|31|77|88|49|_53_|30|
|02/04|20|21|20|47|66|69|29|SS|20|
|02/11|19|25|18|_54_|84|_58_|31|_54_|46|
|02/18|20|19|19|58|60|73|30|47|23|
|02/25|21|24|21|58|68|72|31|48|19|
|03/17|16|21|23|52|69|71|35|28|17|
|03/31|19|23|20|40|74|74|31|35|23|
|04/07|17|23|21|26|59|64|37|20|24|
|04/14|19|23|21|27|65|64|35|20|25|
|04/21|16|23|19|26|_55_|64|36|23|24|
|04/28|14|22|22|30|52|61|36|25|25|
|oS/OS|16|22|25|21|_56_|67|33|24|23|
|05/12|16|22|24|19|63|62|35|21|23|
|05/19|17|24|22|21|51|61|36|25|2S|
|06/02|18|22|22|20|48|66|30|20|2S|
|06/09|23|23|27|19|48|49|32|20|22|
|06/16|22|20|19|20|S0|44|32|17|24|
|06/23|22|19|18|21|_45_|42|33|17|25|
|06/30|19|20|19|19|42|40|33|17|25|
|07/07|18|18|19|18|38|39|34|17|28|
|07/14|20|18|20|18|47|36|33|17|24|
|07/21|18|18|18|18|40|37|34|16|27|
|07/28|20|17|21|18|38|37|33|17|26|
|08/04|17|19|20|16|37|36|32|14|24|
|08/11|<br>22|19|20|14|38|33|30|16|20|
|08/18|23|18|26|14|39|33|30|17|22|
|08/25|22|19|22|14|40|34|29|18|24|

12
Table 2. Coefficients of variation (xIOO) of commodity prices from city to city in state stores (cont.)

|sugar|broad 1|brcad 2|millet<br>groats|vermicelli|potates|cabbage|onions|apples|cigaretUs|
|---|---|---|---|---|---|---|---|---|---|
|86|43|77|-|63|56|53|48|68|96|
|63|8|40|56|62|46|_55_|37|23|8|
|62|18|19|_55_|41|51|63|42|30|63|
|45|17|18|41|44|38|40|38|44|57.|
|73|28|21|58|41|32|36|37|37|S8|
|104|45|23|52|38|41|40|39|31|42|
|100|47|43|51|38|42|62|41|38|53|
|101|44|46|57|31|32|58|45|39|48|
|88|47|S1|49|27|39|62|39|41|35|
|87|S7|56|45|26|36|56|42|37|40|
|92|_55_|51|48|30|47|64|39|37|41|
|70|54|S0|45|34|43|49|29|33|41|
|68|57|54|46|33|43|41|26|40|26|
|69|62|S0|_4S_|26|44|48|27|42|35|
|64|S9|51|40|27|43|49|33|49|31|
|58|61|56|45|29|41|43|27|48|31|
|52|61|59|45|31|39|25|43|38|33|
|45|52|_55_|47|33|38|24|38|39|20|
|47|54|52|40|30|40|23|41|27|34|
|48|49|48|36|31|39|2S|34|_3S_|26|
|52|_55_|_53_|37|33|41|31|32|29|30|
|48|52|51|36|32|42|30|32|40|29|
|47|49|49|52|29|54|37|29|26|25|
|46|40|41|45|27|47|52|30|52|18|
|43|40|44|42|32|36|60|44|58|23|
|39|36|41|43|30|34|43|39|44|18|
|32|38|40|41|29|37|47|71|56|25|
|35|37|40|_51_|27|43|49|71|53|28|
|33|35|39|49|25|38|52|67|60|35|

13
Table 3. Standard deviation of commodity prices from city to city at selected dates in state stores.

|Product|December 1991|February 4, 1992<br>rubles p|May 12, 1992<br>er unit|August 25, 1992|
|---|---|---|---|---|
|Beef|5.41|13.33|_10.56_|19.11|
|Sausage 1|6.85|14.53|20.87|25.92|
|Sausage 2|19.92|22.69|31.34|43.07|
|Butter|6.08|39.90|32.12|27.06|
|Vegetable oil|3.63|8.10|23.46|21.09|
|Milk|0.49|1.29|3.59|3.26|
|Sour cream|3.71|10.70|16.70|15.88|
|Cheese|7.59|41.S7|28.93|27.08|
|Eggs|2.60|2.97|5.31|5.92|
|Sugar|1.22|3.71|26.18|18.72|
|Bread 1|0.22|0.34|2.57|3.46|
|Bread 2|0.46|0.45|2.42|4.76|
|Millet groats|-|1.66|3.03|4.97|
|Vermicelli|0.93|_5.95_|4.96|7.47|
|Potatoes|1.05|1.52|2.81|7.48|
|Cabbage|1.05|1.79|5.28|6.76|
|Onions|2.38|3.57|4.12|14.78|
|Apples|4.80|_10.50_|22.70|22.23|
|Cigarettes|1.86|2.78|3.71|7.70|

14
Table 4. Coefficients of variation of commodity prices from city to city at selected dates in private markets.

|Product|February 4, 1992|May 12, 1992|August 25, 1992|
|---|---|---|---|
|Beef|0.53|0.34|0.30|
|Butter|0.20|0.18|0.11|
|Vegetable oil|0.62|0.41|0.45|
|Milk|0.62|0.41|0.45|
|Sour cream|0.35|0.32|0.30|
|Eggs|0.21|0.26|0.26|
|Potatoes|0.37|0.44|0.48|
|Cabbage|0.35|0.32|0.65|
|Onions|0.33|0.31|0.50|
|Apples|0.24|0.26|0.75|
|Cigarettes|0.25|0.13|0.24|

1S
For purposes of obtaining an indication of improved market integration during 1992, changes in the coefficient of variation between February and August provide the best measure. The Table 2 data indicate little of such integration for some commodities, while the coefficient of variation de-clined substantially for cheese, butter, vermicelli, vegetable oil, milk, sour cream, sugar, and cigarettes.

Table 4 provides similar comparisons for prices in collective farm markets. Here we see more of the. expected trend toward market integration, particularly for beef, but there is still a lack of convergence for some commodities.

# Causes of City-to-City Price Differences

In order to investigate the causes of persistent price differences between cities, we can attempt to explain statistically each city's deviation from the all-Russia ave.age at a given time by means of supply/demand variables. The Center for Economic Analysis and Forecasting provided data on:

* Income per worker in each month of 1992 in each province

* VWhether each province was a net producer or consumer of each commodity * The pricing zone in prior USSR administration (proxy for transport costs) * Presence or absence of provincial price regulation after January 1992

These data were used to estimate the following linear regression equation for each commodity: (1) Dt = 00 + lit + 02Ej + **i3Ij** + **4**<sup>**Rkt**+</sup><sup>_5Zi_+ eit</sup> where Dit is the difference between city i's price and the all-Russia price in week t, Yit is income in the province of city i in the month containing week t, EA = 1 if the province produced more of the commodity than it consumed (otherwise zero), Ii = **1** if the province consumed more of the commodity than it produced, and R, = 1 if the city maintained regulation in week t. Z1 is a vector of 3 dummy variables-Z, = 1 if the province is in zone 1, Z2 = **I** if in zone 2, Z, = **1** if in zone 3. The O's are parameters to be estimated and the q, are random errors assumed to be independently and identically 16
distributed. The **ZA,** E and I, are not linear combinations of the intercept term because some provinces are classified as being neither an exporter nor an importer, and some cities are not in any of the 3 zones. The results of fitting this equation to the February-August price data for each of the 19 commodities are shown in Table _5._ Generally, only a small part of the cities' state-store price deviations from the all-Russia price can be explained by these regressions. The R<sup>2</sup> (adjusted for degrees of freedom) range from .051 (cigarettes) to .320 (milk).

Of the variables intended to explain the price differences, income is most in accord with expectations. Higher income in a city causes higher prices, i.e., increased demand, for every commodity except potatoes and milk. The largest percentage effect is in vegetable oil where a 100 ruble (2.5 percent) income increase is associated with a 0.32 ruble (.7 percent) price increase. The next biggest effect is in butter, where a 100 ruble income increase raises the butter price .53 rubles (.3 percent).

The other variables have only sporadic and quantitatively small effects with only a few exceptions. The ruble effects are easy to interpret since the variables other than income are all 0-1 dummies. Thus, the estimated effect on beef prices of being in a regulated province is a 3.9 ruble (20 percent) reduction in excess of price over average price. Being in a net exporting region reduces the prices of vegetable oil, milk, sugar, vermicelli, potatoes, cabbage, and cigarettes significantly.

Table 6 shows regression results for collective farm markets. There are fewer commodities because several had few observations (ess than 200) with sporadic and extreme prices. The results are quite similar to the state-store regressions, but with higher explained variation of prices. The R<sup>2</sup> ranged from .12 (sour cream) to .51 (vegetable oil).

Since the variables of these regressions explain relatively little, the regressions cannot go far in explaining the rate of market integration in Russia. Even after accounting for differences in income, reported local regulation and other important economic variables, about 80 percent of the price deviation among cities remains unexplained. The residuals from these regressions may throw light on the process 17
Table _5._ Regression coefficients (*t ratios) explaining city price deviations from all-Russia prices: state stores

|Variale<br>Iotercet|Beef<br>588|Sausage I<br>|Sausage 11<br>|Butter<br>|Commodities<br>Vegetable<br>Oil<br>|Milk|Sour<br>Cream|Cheese|Eggs|
|---|---|---|---|---|---|---|---|---|---|
|p<br>Income|-.<br>(4.27)<br>18|-13.13<br>(6.59)<br>_15_|-37.96<br>(13.19)<br>|89.87<br>(2887)<br>|7.72<br>(2.45)<br>|1.17<br>(5.36)<br>|-11.74<br>(9.995)|-10.41<br>(4.11)|-1.03<br>(2.57)|
|<br>Regulation|.<br>(9.28)<br>-389|_._<br>(4.57)<br>431|4.9<br>(11.27)<br>|5.3<br>(10.86)<br>|3.2<br>(12.14)<br>|-0.1<br>(3.06)<br>|1.5<br>(8.39)|0.023<br>(0.047)|0.73<br>(11.61)|
|<br>Import|.<br>(3.22)<br>453|.<br>(2.44)<br>1415|-1.35<br>(0.56)<br>|-28.79<br>(9.26)<br>|-3.56<br>(2.08)<br>|-0.97<br>(4.58)|-7.24<br>(6.3)|-18.77<br>(6.41)|-1.42<br>(3.75)|
|<br>Export|.<br>(5.09)<br>-086|.<br>(10.74)<br> <br>116|26.93<br>(14.78)<br>|13.24<br>(6.7)<br>|-1.38<br>(0.53)<br>|0.084<br>(0.61)<br>|10.99<br>(14.56)|21.56<br>(12.28)|1.004<br>(3.58)|
|<br>Zone 1|.<br>(1.03)<br>06|<br>-.<br>(0.93)<br>299|8.68<br>(5.07)<br>|1.23<br>(0.64)<br>|-19.27<br>(6.76)<br>|-0.49<br>(3.65)<br>|4.17<br>(5.77)|2.51<br>(1.53)|0.023<br>(0.097)|
|<br>Zone 2|.<br>(0.52)<br>798|.<br>(1.86)<br>426|5.5<br>(2.26)<br>|12.52<br>(4.41)<br>|-8.3<br>(5.2)<br>|-1.72<br>(8.73)<br>|-0.25<br>(0.231)|-4.56<br>(2.08)|-2.48<br>(6.75)|
|<br>Zone 3|.<br>(6.64)<br>548|.<br>(2.56)<br>779|18.9<br>(7.59)<br>|19.08<br>_(6.56)_<br>|-2.9<br>(1.67)<br>|1.09<br>(5.39)<br>|6.49<br>(5.93)|7.34<br>(3.24)|1.36<br>(3.46)|
|<br>R-Square|.<br>(3A2)<br>018|.<br>(3.34)<br>015|17.38<br>(5.05)<br>|18.07<br>(4.46)<br>|-9.44<br>(4.32)<br>|5.02<br>(18.17)<br>|5.92<br>(3.9)|12.29<br>(3.544)|2.59<br>(5.01)|
|<br>Obs|.<br>2636|.<br>2890|0.27<br>|0.13<br>|0.233<br>|0.32<br>|0.2|0.178|0.1987|
|.|||2850|3403|2533|3435|3300|2386|3328|

18
Table 5. Regression coefficients ("t" ratios) explaining city price deviations from all-Russia prices: state stores (cont.)

|Variable|Sugar|Bread I|Bread 11|Noodles|Comm<br>Vermicell<br>i|odities<br>Poaoes|Cabbage|Onions|Apples|Cigarmues|
|---|---|---|---|---|---|---|---|---|---|---|
|Intercept|17.47<br>(3.62)|0.776<br>(2.643)|0.29<br>(1.14)|-0.745<br>(1.25)|0.024<br>(0.038)|-4.16<br>(9.746)|-5.43<br>(8.758)|4.98<br>(7.74)|-18.495<br>(6.411)|-0.612<br>(0.942)|
|Income|0.96<br>(2.95)|0.17<br>(3.34)|0.07<br>(1.441)|0.48<br>(5.46)|0.48<br>(4.572)|1<br>(13.988)|1.4<br>(14.04)|1.4<br>(13.415)|4.1<br>(13.511)|0.37<br>(4.723)|
|Regulation|-7.61<br>(3.52)|-0.12<br>(0.445)|0.178<br>(0.62)|-1.86<br>(3.724)|-2.99<br>(4.426)|-0.68<br>(1.888)|0.555<br>(0.791)|1.64<br>(2.796)|3.66<br>(1.972)|-1.34<br>(2.325)|
|Import|-9.05<br>(1.97)|-|-|0.756<br>(1.653)|-0.073<br>(0.189)|1.46<br>(6.375)|1.475<br>(3.943)|0.462<br>(1.166)|9.33<br>(4.226)|0.3<br>(0.544)|
|Export|-32.72<br>(6.93)|-|-|-0.455<br>(1.014)|-3.015<br>(7.034)|-0.705<br>(2.861|0.792<br>)(1.841)|-0.073<br>(0.153)|-3.3<br>(1.329)|-1.61<br>(2.505)|
|Zone 1|0.13<br>(0.061)|-2.42<br>(8.401)|-2.3<br>(9.16)|-1.28<br>(3.071)|-3.062<br>(5.153)|0.815<br>(2.166|0.471<br>)(0.843)|-0.26<br>(0.485)|-2.67<br>(1.397)|0.83<br>(1.676)|
|Zone 2|8.89<br>(4.22)|-0.84<br>(2.888)|0.684<br>(2.62)|0.046<br>(0.113)|2.87<br>(4.764)|2.26<br>(5.908)|3.64<br>(6.198)|2.71<br>(4.73)|5.846<br>(2.976)|1.55<br>(3.008)|
|Zone 3|-6.84<br>(2.42)|0.874<br>(2.595)|0.395<br>(0.897)|1.61<br>(2.774)|-1.06<br>(1.253)|2.12<br>(4.186)|3.02<br>(4.008)|5.47<br>(7.258)|7.465<br>(2.779)|1.776<br>(2.662)|
|R-Square|0.166|0.154|0.164|0.137|0.1482|0.1513|0.1719|0.1507|0.2456|0.0509|
|Obs.|2490|1715|2443|1372|2722|2703|2445|2828|1772|1707|

19
Table 6. Regression coefficients **("t"** ratios) explaining city price deviations from all-Russia prices: collective farm markets

|Variable<br>|Bread<br>|Butter<br>|Vegetable<br>Oil<br>|Milk|Sour<br>Cream|Eggs|Potatoes|Cabbage|Onions|Apples|
|---|---|---|---|---|---|---|---|---|---|---|
|Intercept<br>I|-6.16<br>(2.5650<br>|81.86<br>(19.455)<br>|17.66<br>(3.058)<br>|3.91<br>(5.46)<br>|-2.69<br>(0.728)|4.1<br>(4.665)|-4.68<br>(7.347)|-6.37<br>(7.604)|-8.37<br>(8.815)|-22.56<br>(6.619)|
|ncome<br>li|_5.1_<br>(11.277)<br>|0.528<br>(0.554)<br>|4.1<br>(8.285)<br>|0.77<br>(6.115)<br>|3.4<br>(4.982)|1.2<br>(6.544)|1.1<br>(10.184)|3.1<br>(17.325)|3.6<br>(19.72)|7.6<br>(16.483)|
|Reguaton<br>I|8.19<br>(3.441)<br>|-20.19<br>(3.919)<br>|21.5<br>(7.895)<br>|0.13<br>(0.179)<br>|-9.54<br>(2.238)|-0.66<br>_(0.589)_|1.22<br>(1.897)|2.77<br>(2.632)|3.78<br>(4.097)|4.004<br>(1.486)|
|mport<br>E|17.17<br>(10.952)<br>|21.97<br>(3.919)<br>|21.5<br>(7.895)<br>|0.13<br>(0.179)<br>|-9.54<br>(2.238)|-0.66<br>(0.589)|3.1<br>(8.297)|2.55<br>(4.394)|0.73<br>(1.207)|9.82<br>(3.958)|
|xport<br>|-1.54<br>(1.029)<br>|-5.49<br>(2.747)<br>|-22.13<br>(4.057)<br>|0.69<br>(1.808)<br>|1.31<br>(0.61)|-2.73<br>(5.965)|-1.7<br>(4.2)|-1.25<br>(2.064)|1-.36<br>(1.996)|5.36<br>(1.867)|
|Zone 1<br>|-19.3<br>(10.244)<br>|-18.27<br>(5.075)<br>|-20.73<br>(10.951)<br>|-8.67<br>(12.441)<br>|-17.83<br>(5.107)|-6.54<br>(9.06)|-0.92<br>(1.645)|-1.93<br>(2.452)|-1.46<br>(1.78)|-7.007<br>(2.886)|
|Zone 2<br>Z|-13.29<br>(6.727)<br>|-15.46<br>(3.917)<br>|-17.23<br>(7.91)<br>|-6.1<br>(8.784)|-12.73<br>(3.651)|-2.76<br>(3.353)|1.6<br>(2.807)|2.17<br>(2.696)|0.67<br> (0.812)|12.83<br>(5.154)|
|one 3<br>RS|-13.11<br>(2.849)<br>|43.43<br>(1.871)<br>|3.88<br>(1.48)<br>|-<br>|-46.4<br>(2.614)|-14.38<br>(4.814)|4.25<br>(4.691)|-4.56<br>(2.353)|-2.42<br>(1.439)|13.8<br>(3.558)|
|-quare<br>Ob|0.2487<br>|0.145<br>|0.5055<br>|0.2386<br>|0.1201<br>|0.1603|0.1678|0.2854|0.1978|0.2305|
|s.|2557|1302|1264|1825|1977|16781|2764|1758|2266|2593|

20
in two ways: first, in exploring how city-to-city food price differences change over time for different commodities; and second, whether certain cities are persistently high or low in price compared to the allRussia average.

Trends in resMidual food price variation The relative residual differences between a city's price and the all-Russia mean price are used to fit the following equation for each commodity:

# (2)

_let I_ = c + a2t + vit where t is measured as days since January 1, 1992. The relative residual, f?, is defined as (3) ft = a, / PI where P, is the estimated residual from equation (1) and P, is the mean price of the commodity at time t. The dependent variable is put in relative terms to adjust for inflation.

One might expect that the markets would take time to adjust to the city-to-city price differences that emerged when food prices were deregulated in January, so that the unexplained price differences would be less, the later in 1992. This would cause a2 < 0 in equation (2).

The results of the regressions are shown in Table 7. All the commodities but four (millet groats, potatoes, onions, and apples) show a significant reduction in the residuals over time. Potatoes, onions, and apples have increased city-to-city price differences in August, apparently as new crops became available in some areas (see Table 2). Before August, residual city-to-city price variation was declining for these commodities, too. So we do see quite pervasive evidence of market integration.

The coefficients indicate, however, fairly slow elimination of city-to-city differences. The coefficient for beef implies that by the end of August (t = 240), the average city's residual price difference from the all-Russia mean beef price was reduced by only 3.8 percent of the mean price as compared to January price differences. This is about one-fifth of the average unexplained price differences; that is, it would take about 2'h years to eliminate the cities' price differences that are not 21
Table 7. Estimated reduction in residual price differences in state stores over time.'

|Commodity|&2|"tstatistic|R<sup>2</sup>|
|---|---|---|---|
|Beef|-.016|(3.6)|.005|
|Sausage I|-.033|(7.4)|.018|
|Sausage II|-.021|(4.9)|.008|
|Butter|-.389|(23.6)|.140|
|Vegetable Oil|-.267|(19.5)|.131|
|Milk|-.338|(25.9)|.164|
|Sour Cream|-.017|(2.9)|.002|
|Cheese|-.138|(21.2)|.159|
|Eggs|-.012|(2.8)|.002|
|Sugar|-.63.|(38.7)|.376|
|Bread I|-.147|(10.9)|.065|
|Bread !|-.133|(14.5)|.079|
|Millet groats|.006|(0.4)|.000|
|Vermicelli|-.093|(10.4)|.038|
|Potatoes|.029|(2.9)|.003|
|Cabbage|-.101|(6.1)|.015|
|Onions|-.006|(0.7)|.000|
|Apples|.004|(0.3)|.000|
|Cigarettes|-.162|(12.6)|.085|

* Estimate of a2 in equation 2. t ratios in parentheses.

22
explainable by the variables of equation (1). This is about the average rate of market integration for these 19 commodities.

A first step in understanding why market integration has not occurred as rapidly as one would have hoped is to examine further the characteristics of cities whose prices have remained most persistently low or high relative to all-Russia average prices.

Prices were surveyed in 28 weeks of 1992 for 19 commodities. If a city had prices whose residual (after equation 1) excess over the all-Russia price for a commodity is in the lower 10 percent of all the cities for more than 100 of the (28 x 19 =) 532 observations (19 weeks), then we call this city persistently low-priced. Persistently high-priced cities are defined analogously.

Table 8 summarizes the results of applying these definitions. Spe .ial circumstances apply in both the high- and low-priced cities. For example, low-priced cities may be company towns dominated by a large industrial enterprise that provides cheap food, or the city may be an administrative center of an autonomous republic that maintains food pricing policy different from federal policy. The high-priced cities tend to be in the Far East, plus Moscow and St. Petersburg.

# Regional Market Integration

Because the prices that are furthest from what one would expect are in cities in extreme locations and special industrial situations, the all-Russia regressions and residuals may well mask more complete economic integration within areas that are large, but not so vast as the whole of Russia.

We focus on four regions, omitting the most northern and eastern parts of the country. The regions, and cities surveyed in each, are shown in Table 9. The regions have 14 to 18 cities sampled, and cover areas of roughly 400 by 400 miles (Central), 400 by 600 miles (North Caucasus), 300 by 900 miles (Volga), and 400 by 750 miles (Urals); that is, they are roughly the size of 2 or 3 U.S. Midwestern states, or in the case of the Volga region, the lower Mississippi basin from St. Louis to New Orleans.

23
Table 8. Persistently low- and high-priced cities.

|Low-priced cities||observations<br>in lower 10% of residuals||
|---|---|---|---|
|city name|city code|total<br>state stores|market|
|Noril'sk|11044294|177<br>175|2|
|Azmas|11224033|146<br>88|58|
|Ulyanovsk|11734018|140<br>124|16|
|Ukhta|11874251|_135_<br>103|32|
|Izhevsk|11944017|128<br>85|43|
|Cherkesslc|11914016|125<br>37|88|
|Kaa'|11924012|124<br>113|11|
|Taishet|11254287|118<br>_55_|63|
|Syktyvkar|11874015|114<br>93|21|
|Smolensk|11664016|112<br>84|28|
|Yoshkar-Ola|<br>11884019|112<br>82|30|
|Shuia|11244113|111<br>58|53|
|Vladivostok|11054016|106<br>32|74|
|Angarak|11254057|106<br>85|21|
|_Aban_|11954010|105<br>_3S_|70|
|Maikop|11794011|103<br>35|68|
|Tula|11704017|<br>101<br>74|27|
|High-priced cities||observations<br>in upper10%of residuals||
|Petopavlovsak-<br>Kzmnchatkil|11304016<br>|289<br>145|144|
|Yuzhno-<br>Sakhalinsk|11644019|228<br>161|67|
|Magadan|11444013|193<br>147|46|
|St. Petersburg|1140|160<br>58|102|
|Moscow|1145|138<br>26|112|
|Novorossisk|11034203|134<br>49|85|
|Kaliningrad|11274019|130<br>61|69|
|Yakutsk|11984011|128<br>97|31|
|'orkuta|11874104|125<br>90|35|
|Kemerovo<br>.|11324013|108<br>101|7|
|Tomsk|11694017|106<br>89|17|
|Novosibirsk|11504011|103<br>76|27|
|Khabarovsk|11084017|102<br>49|53|

24
Table 9. Cities in regions for tests of market integration.

|Central Region|Volga Region|North Caucasus<br>Region|Urals Region|
|---|---|---|---|
|Briansk|Elista|Maikop|Ufa|
|Vladimir|Kazan'|Makhachkala|Ishimbai|
|Ivonovo|Naberezhnye Chelny|Nal'chik|Neftekamsk|
|Schuya|Chistopol'|Cherkessk|Sterlitamak|
|Kaluga|Astrakhan'|Vladikavkaz|Izhevsk|
|Obninsk|Penza|Groznyi|Kurgan|
|Kostroma|Volgograd|Krasnodar|Orenburg|
|Moscow|Kamyshin|Armavir|Omsk|
|Orekhova|Samara|Novorossisk|Perm'|
|Electrostal'|Syzran'|Tuapse|Ekaterinburg|
|Orel|Tol'iatti|Stavropol'|Nizhnii-Tagil|
|Riazan'|Saratov|Nevinnomysok|Serov|
|Smolensk|Balakovo|Rostov-on-Don|Cheliabinsk|
|Tver'|Ul'ianovsk|Taganrog|Kopeisk|
|Tula||Shakhty|Miass|
|Novomoskovsk||||
|Yaroslavl'<br>Rybinsk||||

25
Table 10. All Russia compared to regional prices, state stores.

|Sugar|February 11, 1992|August 25, 1992|% change|
|---|---|---|---|
|AlBusas||||
|mean price (rubles)|rub. 12.6|rub._55.7_|342|
|std. dev. (rubles)|rub. 13.1|rub. 18.7|43|
|coef. var.|1.04|.33|-68|
|Central Reg||||
|mean price (rubles)|8.3|66.8|704|
|std. dev. (rubles)|5.7|8.9|56|
|coef. var.|.69|.13|-81|
|Ygaw||||
|mean price (rubles)|_9.5_|41.6|338|
|std. dev. (rubles)|13.8|_15.0_|9|
|coef. var.|.81|.29|**-64**|
|Umh||||
|mean price (rubles)|23.2|57.5|148|
|std. dev. (rubles)|16.6|18.3|10|
|coef. var.|.71|.32|_-55_|

26
Table 11. Regional reduction in residual price differences over time

|Commodity|All Russia<br>(132 cities)|Central<br>Region<br>(18 cities)|Volga Region<br>(14 cities)|North<br>Caucasus<br>(15 cities)|Urals Region<br>(15 cities)|
|---|---|---|---|---|---|
|beef|-.016|-.016|.002|-.031|-.018|
|sausage 1|-.033|-.019|-.030|-.060|-.041|
|sausage 2|-.021|-.022|-.021|-.071|.006|
|butter|-.389|-.244|-.023|-.112|-.099|
|vegetable oil|-.267|-.286|-.288|-.106|-.503|
|milk|-.338|-.405|-.326|-.476|-.352|
|sour cream|-.017|-.028|-.039|-.104|-.061|
|cheese|-.138|-.072|-.116|-.128|-.098|
|eggs|-.013|-.039|.026|-.026|-.023|
|sugar|-.637|-.780|-.452|-.493|-.639|
|bread 1|-.147|-.070|.164|.237|-.368|
|bread 2|-.133|-.038|.223|.068|-.300|
|millet groats|.006|-.048|.023|-.068|-.144|
|vermicelli|-.093|_-.055_|-.086|-.090|-.032|
|potatoes|.029|.041|-.009|.031|-.027|
|cabbage|-.101|-.120|-.025|.015|-.140|
|onions|-.006|-.073|-.059|-.025|.006|
|apples|.004|.024|.102|-.012|-.010|
|cigarettes|-.162|-.218|-.059|-|-|

***** The numbers shows are regression coefficients for the variable t(days) in equation 2 multiplied by 100. A larger negative coefficient indicates more **rapid** market integration.

27
Table 10 compares all-Russia with regional prices for sugar on two dates, one in February and the other in August 1992. The mean prices differ by region but the standard deviation of price widxin the North Caucasus and Urals region is greater than the standard deviation over the whole 132 cities of Russia. Much of the city-to-city price variation is within regions rather than between regional means. One might expect that regional integration would proceed more rapidly than national integration over the vast all-Russian market. Even at the regional level, however, barriers to emergence of markets appear to have been great in February through August 1992. However, the coefficient of variation of price within each region is smaller than the all-Russia C.V. Between February and August the coefficients of variation declined very substantially for each region, but not more than the all-Russia C.V. declined.

The results of more systematic testing of regional market integration are shown in Table 11. RegreF ions like those of Table _5_ were estimated for each region, with the dependent variable being the difference between a city's price and the regional mean price at each date. A typical commodity regression now has 300-400 observations, e.g., 15 cities for 25 weeks, instead of 3000-3500 observations for the all Russia regressions.

The residuals from the regional regressions were then regressed on the number of days since Jan. 1, 1992, as in equation 2. The resulting estimates of a2 are reported in Table 11. The first column repeats the all-Russia results from Table 7. (To save space, t ratios are omitted from Table 11; they are generally smaller than the all-Russia t ratios, but still significant). The row labelled 'sugar" in Table 11 indicates the same results as Table 10. Significant market integration occurred, but on average the regions eliminated city-to-city price differences no more quickly than all of Russia did.

The results for the otd- 18 commodities tell the same story. Some regions had more market integration than all of Russia for certain commodities, but there is no indication that all or any regions had an outstanding performance generally.

28
# Conclusions

The retail food price data by city indicate that significant progress toward market integration occurred in the seven months following the price liberalization of January 1992. A decline in cities' price deviations from the all-Russia meaa price occurred for 17 of the 19 commodities analyzed.

SuLi, iarge differences between cities persist for which there is no explanation in terms of available economic variables. It is likely that this lack of apparent market integration is in part attributable to food pricing policies in some remote cities, or cities where dominant industries subsidize food. Beyond this, there must be significant barriers to the movement of products from low-price to high-price cities. To what extent these barriers are local policies preventing shipments out of low-price areas, lack of entrepreneurship among buyers or sellers within the distribution system, or other constraints or costs is not ascertainable from the data we have. Much of the remaining distortion of prices between and among localities can probably be attributed to the lag in initiating reforms at the enterprise level and in the transport system. Some may be attributable to economic agents' inability to keep up with changes in relative prices associated with the credit-induced general inflation.

It seems clear that large economic gains could be achieved by further market integration. The best evidence of this is from the price relationships between cities in the same region. For example, Ulianovsk on the Volga region had the largest volume of sugar sales (in monitored stores) in the Volga region, and the lowest price, at 25 rubles per kilo as of August 25. At the same time, the two nearest cities in our sample, Syzran' and Samara, 150 and 286 kilometers away, and both also on the Volga River, had prices of 62.5 rubles. Transportation costs in this situation could not have been more than a few rubles per kilo. The profit potential appears enormous, as do the potential welfare gains.

- To obtain a crude approximation of potential welfare gains, Ulianovsk consumes 3000 kilos of sugar weeldy at 25 rub./kg., Samara and Syzran' consume 1000 kilos at _62.5_ rub./kg. Suppose sugar can be moved from Ulianovsk to these cities for 5 rub./kg. (20 percent of its price), and that all three cities have an elasticity of demand for sugar of -.5. Shipping about 300 kilos would equilibrate price at about 37 rub./kg. in Ulianovsk, and 32 rub./kg. in Samara and Syzran'. The gain from the shipment would average about 24 rub./kg., for a 19 rub./kg.

29
Data on the geographic dispersion of food prices in Russia in the eight months following price liberalization of January 1992 suggest the following:

- a. The volume of food sold in monitored shops increased substantially in the weeks following liberalization;

- b. The geographic dispersion of prices decreased significantly over time, suggesting some response of economic agents to the large price differences and opportunities for arbitrage;

- c. M,;re of the reduction in price dispersion took place in the period immediateiy following liberalization than in the subsequent six months;

- d. Although price dispersion declined over time, the decline was slower than would be expected if well-developed markets were actually functioning;

- e. Much (about two-thirds) of the remaining price distortion cannot be explained by traditional economic variables that we have, such as income and proxies for transportation cost.

Further development of food markets will require retention and deepening of price liberalization through removal of local controls and initiation of reform at the enterprise level, through privatization, demonopolization and new entry.

net profit. This amounts to 300 x 19 = 5700 rubles net profit on an investment of 300 x _5_ = 1500 rubles.

30
# APPENDIX. Average Prices and Volume in Monitored Outlets of 19 Commodities in 132 Russian Cities.

<!-- Start of picture text --> Average Prices, Beef<br>(December 1991 -- August 1992)<br>140-<br>1 20 ------.......... ....................................................................<br>...<br>1~~~~~~~~~~~~~~~~~~~~00f- ft<br>e ..f..............................................................................<br>40 . ................................. ...............................................................<br>0 I I I I I I I I I I I I I I I I I I I III I I I I I I<br>Dec91 01/28 02/11 02/25 03(31 04/14 04/32 05/12 0602 06/16 06&30 07/14 07/28 08/11 08/25<br>Date<br>| Market Price - State Price<br><!-- End of picture text -->

31
<!-- Start of picture text --> Volume in Monitored Outlets: Beef<br>(01/21192--08/25/92)<br>60 . ,. .,w............ ........... .............. .. ............. .<br>S. .. 50 S<br>S S'<br>e .. .. . ;:;.;s 7-..32<br>-30 ~~~~~~~~. 1..>,. . . 't .. .......... ........ .......... ......... ... ... ........ ... ..<br>30 .}.. .................... ............... ................ ........... ... ...................<br>° Xt ,@\ ,.e~Mrket; Voum V;olume{'s "tt<br>10' l I I I I I I I I I I I I I I I I I J1 I l I I I!<br>01/21 02/04 MM/1 03/17 04/07 04/21 05/05 05t19 06/09 06/23 07/07 07/21 Oa 04 08/18<br>Date<br>| M arket V olu me .... State V olum e |<br><!-- End of picture text -->

32
<!-- Start of picture text --> Average Prices, Sausage I<br>(Decem ber 1991 -- August 1992)<br>160.-<br>1><br>120- ............. ...... ................. ;;-44: .........<br>8 1........ .......... .................. .......................<br>60 --- ................................----.--.--..................................................................<br>. le<br>I<br>40-... ...-.............................................................................................................<br>20 4 ------------------------------------------------------------------------------------------------------------------<br><!-- End of picture text --> <!-- Start of picture text --> DeC91 01/28 02111 02/25 03/31 0414 04/28 05/12 06102 06/16 06)30 07/14 07128 08111 08125<br>Date<br>| Maket Price State Price |<br><!-- End of picture text -->

33
<!-- Start of picture text --> Volume in Monitored Outlets: Sausage I<br>(01/21192-08fl5/92)<br><!-- End of picture text --> <!-- Start of picture text --> 5160<br>J -140<br>46 ............................... A .... ...... .. .....................<br>4** t% .* .;; : ; ; .; ;-120<br>40X * .. .. . . . . .. . * v, , ......<br>35 ....... J-t---------------------------- -- -- .............................................. -100.k<br>flso...j.~~~~~~~~~~~~~~~~~~~~~80~<br>-0<br>,~~~~~~~~5 q20<br>3440<br>* _O<br>i...4..............2<br>a~~~~~~~Dt<br>a~~~~~~~~~~~~~~~~~~~~~<br>a~~~~~~~~Dt<br>10~ ~ ~ ~ ~~N..re. Vlme.....Sat .lm<br><!-- End of picture text --> <!-- Start of picture text --> a<br><!-- End of picture text --> U~~~~~~~~3
<!-- Start of picture text --> Average Prices, Sausage II<br>(December 1991 -- Aupust 1992)<br>300-<br>250 ................<br>.................................... ........... ; ;;;.........<br>K ^ -~~~~~~~~~~~~0-,0-0 *<br>...................' ...... .... .....................<br>10o ... ...............................................................................................................<br>15.<br>50- ;.<br>*<br>Dac931 01/283 02111 02/25 03'31 04/14 04/28 05/12 060)2 06/16 0W 30' 07/14 07/283 08/11 08/2M5<br>D ate<br>-M arket P?rice State P?rice<br><!-- End of picture text --> _35_
**9c**

<!-- Start of picture text --> 2aUlIOA OW3S ....... 2mnloA IJA -<br><!-- End of picture text --> <!-- Start of picture text --> anet<br>8Mi80 VONB [ZZILO Z MZ o 2630 6C90 61/50 90/S0 2ZAv0 LO"t LUC0 WMiZ VO/ZO 24/0<br>OOW-<br>OOE- , .. .......... . . ..... .. . . .... , .....4,'0<br>00k,~~~~~~~~~~~~~~~~~~~~~~~~~00,<br>1 V .iS11 W l . .... ..<br><009..<br>006-<br>-OL O -- -- - - S -:--- --- - --- OE<br><!-- End of picture text -->

**(Z615Z/80-Z611ZI10)** II a8wsnuS :slaopno pezi!olqo u! amnloA
Average Prices, Butter (December 1991 -- August 1992) <!-- Start of picture text --> 200w<br>180-<br>.<br>160 - -- ---- ........................................... b - - --- ; --- ;- - -- -----......<br>140- ..............;<br>120 ---------------- - ......................... ......................................<br>100 ....... ----.-- --- - ----t-------------- ---------.-----------------------------------------<br>.<br>80H ... .. ................. .... ... ............ ............ ............................... ....... .............. ....<br>he3101A2 21 2] 33 41 04u28 05/12' 4602 06J16 06u30 07/14 07126 03U11 082:5<br>D ate<br>M arket PBrice .... S tate P'rice<br><!-- End of picture text --> 3 7
<!-- Start of picture text --> State Volume<br>MThusands)<br>.~~~ t<br>iz5 .......'......... .....<br>* *..1.~~~~~a......<br>tN S<br>0M<br>im ~ ~ ~ ~ ~~~~~~~~~~-.<br>a~~~~~~MaktVlm<br><!-- End of picture text -->
<!-- Start of picture text --> Average Prices, Vegetable Oil<br>(December 1991 - August 1992)<br>70<br>60 .<br>50 *e......... ..............<br>.'.<br>20- ..-.I..... ................................................................................................................<br>o , , , , , ,,................. .................................................<br>Decal 01/28 02111 OM2 03/31 04/14 04M2 05/12 0602 06&16 06,3 07'/14' 079a 08/11 08E5<br>Date<br>|- Market Price .... State Price |<br><!-- End of picture text -->

39
<!-- Start of picture text --> Volume in Monitored Outlets: Vegetable Oil<br>(01/21/92--08/25/92)<br>.10<br>N. 9<br>351- -<br>gt30 ..~~: . h,7W.<br>|: |<br>a t<br>............ .......... . .........<br>1 * S 37<br>Al~~~~~~~ * Make Voum Stt olm<br>* S S S *~~~~~are olm .... tt Vlm<br>* S * * S * Ii~~4<br><!-- End of picture text -->
<!-- Start of picture text --> Average Prices, Milk<br>(December 1991 -- August 1992)<br>18<br>12 -- - - - - - - - - - - - - - -- - - - - - - - - - - - - - ....................... .... ,..... ......... ... .<br>4 14 ------- ........ .......... ... ... ....... .......................... .....<br>. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - .t ...................... ........<br>6e . ........... ...........---------------........................ .~~~~~~~~0 ................ ;.;.<br>E 8 ~~~~~~~~~~. ...... ,-.......'. ...; '. .'. o : '. '. "<br>--<br>2 --- -- -------- ............................ -;;. ¢.. ...................... ................<br>Dec9i3 01/28 02111 O2Y2] 03U31 04/14 04/28 05/12 06&02 06J16 06U30 07/14 07/283 08/11 03125<br>Date<br>. M arket E?rice ..... State l?rice|<br><!-- End of picture text -->

41
<!-- Start of picture text --> Volume in Monitored Outlets: Milk<br>(01/21/92-08/25/92)<br><!-- End of picture text --> <!-- Start of picture text --> ............. . 9500<br>.* A o<br>450- .' '* / \ -8500 W<br>* . . .. . . .<br>I~~~~~~~~~~~<br>**7 t3X ; A \ -8000<br>200 - .------ --1---- ---- ---------------------- ------ . . V 1---------- ---------------------------- ------ -6000<br>5000<br>01/21 O0204 02/18 03117 04/07 04/21 05/05 05/19 08109 06/23 07/07 07/21 08/04 08/18<br>Date<br>|- Market Volume ... State Volume<br><!-- End of picture text -->

42
<!-- Start of picture text --> Average Prices, Sour Cream<br>(December 1991 -- August 1992)<br><!-- End of picture text --> <!-- Start of picture text --> 140-<br>12Xt- . t ...................... ...<br>100*--------*--- ............................................<br>. .<br>20- ............ ....<br>D8C91 01/28 02111 0225 03/31 04/14 04/28 05/12 06'02 06/16 06(30 07/14 07/28 G9/11 08/25<br>Date<br>- Market Price State Price<br><!-- End of picture text --> 43
<!-- Start of picture text --> Volume in Monitored Outlets: Sour Cream<br>(01/21/92-08/25/92)<br>45'<br>4s- ~~~~~~~~~~~~~~~~*f. e .. -. -20<br>40 . 0..... . . ;;;;... .. .. . ;.,. .. fK.,...... .;,,'.......................<br>4 * 1~~~~~~~~~~~8<br>* ~~~~~~~~~~~~~~~~~~16<br>~ ~ 25 .... -.............-..-... 12 ><br>A<br>C {g: 2 sce 0 .:1 -.---.---.-.-.t---- - - --- -------- ----- - -------- ----------------------<br>--<br>15- -- -- '- --- t .<br>-6<br>Io4 ......... ...... =.................... -4<br>-1/21 02i04 02/18 03117 04/07 04/21 oYOS 05/19 06i0902307/07 07j21 08i04 08/18<br>Date<br>- Market Volume . State Volume<br><!-- End of picture text --> 44
<!-- Start of picture text --> Average Prices, Cheese<br>(December 1991 -- August 1992)<br><!-- End of picture text --> <!-- Start of picture text --> 300<br>IS ......... .. . .... .........................<br>9~~~~~~~~~~~~~~~~~~~~~~~060 ee..600.........<br>,<br>d50rw- .........- ............................................... -- r.. .......<br>o.t I I I I I -- _..,I<br>°eCs91 01/28 02/11 02i25 03i31 04i14 04/28 05i12 06'02' 0616 06/30 07'/14' 07i2 08 11 08i2<br>Date<br>Market Price .... State Price<br><!-- End of picture text -->

**45**
Volume in Monitored Outlets: Cheese (01/21/92-08125192) <!-- Start of picture text --> 12<br>is 1 ------ ............................................................... , '<br>10<br>16 - ------------- .,...............................................-..----..; : -.....-.-1<br>-<br>; f12 -------- . ................. ......................<br>;..:::<br>14~~~~~~~~~~~~~~~~~~~~~~~.<br>10 . '''''''' ............. ............................................- 4............ . 6<br>2~~~~~~~~~~~~~~~~~ t '''''''-- i;*- - - ---------.............. 0*----<br>- ---- I,<br>4 t -- - ... .................................................. ...,,,,,,,,,,, .2<br>Date<br>Market Volume ...... State Volume |<br><!-- End of picture text -->

46
<!-- Start of picture text --> Average Prices, Eggs<br>(December 1991 -- August1992)<br>-30.<br>X;L................. .... ........ . . . .. ........................... ............................... ................... .<br>29e ~~~~~~~.. 7.................................. .................................<br>. . *...<br>0-,............................................................... ................................... ,--.---...........<br>Dec91 01/28 02/11 02/25 03J31 04J14 0/805/12' 0602 06/1I6 06J30 07/14 07M 08/11 MIS2<br>Date<br>- Market Price .... State Price |<br><!-- End of picture text -->

47
**Volume** in Monitored Outlets: Eggs **(01/21/92-08/25/92)**

<!-- Start of picture text --> 8000- .9000<br>7000 ......... ......... ...................... ........................................... ................ 8000<br>. .. .. . . ... .7 0<br>6 0 t .t .. .. . . . .. .. .. . .. . .. .. . . .. . . .. . .. . .. . . .. . . .. ..<br>S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ -O<br>3 5000t .................. ------------------------------------ ----------- ------------------ - -------<br>* 7~~~~~~~~~~~~~~~~~~~~-000<br>X<br>> °400- t- --------- t-- t -- ---- ------- ---------- ---------------------------------- .6~~~~~~~~~~~~~~~~~~~~-000<br>o:3000 -- .......... l..------. ......................- ...... --. ............ .............................<br>---- - --- 2--------------------------------------------<br>2000t t- .......... .......... -- -<br>aooS- - C = = -1000 5<br><!-- End of picture text -->

**48**
6t' <!-- Start of picture text -->
| o ael ........ aaE Ms 1a0eyg _<br>SZ/80 [L/80 9/O I I I I VLILO I I I I OCe9O I 9L/90 I I ZO/ I 90 III I 8M4'o t'Lft'K I Lea/ sO I I I I LL/0O 8/O I I I L/[ I 0<br>§,,.......................................................................... ..................................... ! 4100~~~~~~~~~~~,::>, -OL 't ,.......<br>................................................... .................. ;;;_.*..'....... .... 4 .. ............... O<br>.09~~~~~~~~~~~~~~~4<br>.............. ..... ;.; poeswlg:-nn~ ................. ... .............. 0 -S<br>,,,.W..... .. 00.. 4<br>. -OL<br>~~~~~~~~~~~~~~~~~~~~. ....................... .......... -*-08<br>-06<br>(Z6Q SsngnV -- 166T zaquioooa)<br>.mnS 'SZOUd -Sle.1AV<br><!-- End of picture text -->
<!-- Start of picture text --> Volume in Monitored Outlets: Sugar<br>(01/21/92-08/25/92)<br>160- 14<br>.~~~~~~~~~~~~~~~~~~~~12<br>U-10<br>0 -10<br>---------- ----------------------- 4 . I..~~~~~~~~~~~~~~~~~~ ........<br>120 -.<br>01121 0204* 0280 S U U700 *10/. * ~90&902 70 711010 8 8~~Dat<br>U U *Mre olm .... SteVlm<br>S S *~~~~~5<br>50~~~~~~~~0-<br><!-- End of picture text -->
<!-- Start of picture text --> SZJ80 LL/2O 9Z/LO tuLo0 O09o 9L90 ZO/90 ZL/so vt'O t4O L/co SZ/ZO LL/Zo 9/ILO W00<br>.................................................................................... ......................................... "._'_<br>................................................ ...................... ;;;._..-.:-.':........................... .~ .........<br>1......... ,..................................................... ...................<br>..<br>- -----^ -------------<br>................I........../------------------.... ......"<br>-.;------- --------;;-<br>................. .U." ........... ;..;;..... w. ..... .... . . . . . . .. . . . . . . . .. . .. ._ . . . . .. . . . . . . . O<br>..... z v . . . . . . . . . . . . . .~~~~~~~~~~~~~~~~~~~~~~~~~L .. . . ..e . . .. * .. e . ..... . .. . ..... . . . . . . . . . . . . . .. .. .. .<br>(Z661 ISn2nV -- 1661 ioqtuo:)a<br>I Prala 'sooUd O3B1UAV<br><!-- End of picture text -->
Zs <!-- Start of picture text --> omnloA axsS ........ omnloA 121eyW<br>wazB<br>98I.j0 "MO L[Z0 LO/LO MZ90 60,90 6M/90 90/90 LZ1t0 L0OV0 LWC0 9LiZ0 t0/Z0 MM /L0<br>5 .................... ................... .. .............. ............ .... .. .... ...... ......... ......... - 08<br>.................... ................................ ........ .......<br>...... ..... A I ............. ................ ...... -08;<br><!-- End of picture text -->

**(Z6/SZ/80-Z6/TZ/T0) Ipeoig** :slopno paunonmo m amnloA
<!-- Start of picture text --> Average Prices, Bread II<br>(December 1991 -- August 1992)<br>14-<br>12-;..,<br>100......................................................................... ....................<br>4d-- -- ---- ----- -- ------------- ..........................................<br>6 - ---.----- ................<br>------------------<br>t2; ---------------------------------------------------------<br>Dec91 01128 02/11 02/25 03J31 04114' 04628 05112 06102 4616' 0613007/14 07128 0811 MO5<br>Date<br>.... State Ptice<br><!-- End of picture text --> 53
<!-- Start of picture text --> Volume in Monitored Outlets: Bread II<br>(01/21192-08/25/92)<br><!-- End of picture text --> <!-- Start of picture text --> 250- 90<br>200 . ........ ......................... . 7. 0<br>i .960<br>50 f ~~~~~~~~~~~~* 200-~~~~~~~~~~~~~~~~~~~~~~~~~2 20<br>i 100 .... ,'.................................................................................................... .............................. 4X<br>.' ~~~~~~~~~~~~~~~~~~~~~~~30<br>o- - - - r - - - - - - -<br>01/21 02/04 02/18 O317 04v07 04u21 05*05 05*19 06(09 0&3 07/07 07/21 0804 08 718<br>D ate<br>| M arket V oluume State V olum3e |<br><!-- End of picture text -->

54
<!-- Start of picture text --> Average Prices, Millet Groats<br>-<br>(December 1991 August 1992)<br>3 ....... ......................<br>I~~~~~~~~~~~~~~~~~~~~~~~~ C<br>' ;;.. .............. e. . . . .................................................................. ................................<br>Der91 0112B o2/11 02125 03/31 0414 0412 05/12' 0R2 W16 0660 07/14 07=' 011<br>Date<br>..... State Price<br><!-- End of picture text -->

**_55_**
<!-- Start of picture text --> Volume in Monitored Outlets: Millet Groats<br>(01/21/92-08/25/92)<br>11* _4000<br>9 ..... J r- --k ------ -------- ---- ----------- -----------------------..------.----.-.-----..-----.- -3|<br>9 .'1"' ., ......... ., ................................................ .................................... 3500<br>79... . ...<br>q, M 4 .......... .. ...................................................................<br>3 b: \* 3 , 5000<br>.2~~~~~~~~~-50O0<br>= 7 ~ ~....................a...... x ..............<br>* S~~~~~~~~~~~~~0 .................<br>D ate<br>Make Voum .... Stat Volume<br>* 5~~~~~~~5<br>56~~~~~~~~5*<br><!-- End of picture text -->
<!-- Start of picture text --> Average Prices, Vermicelli<br>(December 1991 -- August 1992)<br>5e.U.............. ........ . .<br>A.e<br>†*< 3 *t..;; .. ;,<br>10 . ;.... .................. ................................ .. .. ... .. .... .... ........ ........... .... .... ....... ......... ..... ............. .. .<br>0'~ ~ ~ i ~ ~ . ,,.0 I I I -ii I II I I I<br>Decs1 01/2 02/11 02I 25 03/31 04/14 04J28 05/12 06102 06/16 0630 07/14 078 08/11 08f25<br>Date<br>Market Price . State Price<br><!-- End of picture text --> 57
<!-- Start of picture text --> Volume in Monitored Outlets: Vermicelli<br>(01/21/92-08/25/92)<br>28 . . -7000<br>5X; t .. ......... ................................... ............. ............. .... ..... 60<br>24.... . * -- ----------- . r- --------------------------- .- S ......... -------------------- oN<br>_ 5,20 * < ------- ------- -5000<br>t ;<br>> ,2... ..... . .......... ........ 2-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 ; --------s---------------------- j~* I------- ---------I---------<br>20..... '---- 'rS = 8 20.*~~~~~~~~~~~~~~.a.4~~~~~~-000 'I .<br>21 00~~~~~~~ 0-'°°°<br>SD S ** S D at<br>--- - 2o40/8 ---- oe1 40 -------- *511 ------ %................... ---------<br>10I T T IT I to Y<br>S 58 S<br>MaktVolume . ... State Volume<br><!-- End of picture text -->

**_58_**
Average Prices, Apple (December 1991 -- August 1992) <!-- Start of picture text --> 90<br>80 --------------------------------------------------------------.-----.........................<br>70 ------------------------------------ : - ............... ........<br>8.O.<br>-6- .... .......................................................................... a................................<br>70.<br>sOA ............................................. ... ....................................<br>30, --- ,vs ........ .", ..................................................................... ,,,,,,,,.,,,, ...........<br>Dec91' 01/'28 02}11 021'25 0a30 04/14 04J28 05/12' 602' 0616' 0639 07/14 07/28 0811 08/25<br>Date<br>| M arket E'rice ....State P'rice |<br><!-- End of picture text -->

59
<!-- Start of picture text --> Volume in Monitored Outlets: Apples<br>(01/21/92-08/25/92)<br>120.<br>40 ....... _ .<br>C.. .<br>20, --------------- 0 ----- -------- --A- '''''''''''''''''''''''--t'''I I I I I.<br>:>~~~~~~~~~~~~~~~~~~~.............. *.e ". \<br>01/21 02(04 02118 03t17 04107 04/21 05(05 05/19 06/0 06/23 07/07 07/21 08104 08/18<br>Date<br>|_ Market Volume State Volume |<br><!-- End of picture text -->

60
<!-- Start of picture text --> Average Prices, Onion<br>(December 1991 -- August 1992)<br>30-<br>2 .<br>25 ........................................................ ........ v<br>15' ;.<br>- ;q - n ; : .-.--.--.. ;:; -................................ .................................<br>S-0.. .............................................. 0..............................0..........................<br>10 , .<br>Decff9l 01/283 02/11 OZ2Z5 03t31 04V14 04/28M 05112 063Q02 06/16 OCU30 O7/14' 0-7;M1 OB/11 NO8U<br>D ate<br>_ M arket lrice .... State P?rice |<br><!-- End of picture text -->

61
<!-- Start of picture text --> Volume in Monitored Outlets: Onions<br>(01/21/92-08125/92)<br>70.<br>*<br>.;.. . .0 . ....<br>w~~~~ .. .........................................<br>>~~~~~~<br>* * *~~~~~~~~~~~~~~..4* *#o*<br>> w , ~..... . . . ........ ......... .... .................... .........<br>4- ..................... ro .............................,..\...,,,,...........<br>10 ........................................................... .. ............................. ~~~~........ ................ .<br>- - Market Volume StateVolume |<br><!-- End of picture text -->

62
# Average Prices, Cabbage (December 1991 -- August 1992)

<!-- Start of picture text --> 30-<br>2S- ........................................................ .........-.-.-.--.--.-.---.-.-<br>* IV<br>205-o -e*-Z@--.................................- -----;X^, *--....................... ............ ... .....<br>.. . .. . . .. . l ............... * ..<br>10-, ---------- ......-..-...... Vt ......................... ................... t.........<br>Oi I.I<br>DOIec90 1 /28 02/11 02125 03/31 0414 04i28 05/12 05/02 06/16 06i30 07/14 07/28 08/11 08M25<br>Date<br><!-- End of picture text --> Market Price 0'0' State Price 63
# Volume in Monitored Outlets: Cabbage (01/21192--08/25/92)

<!-- Start of picture text --> 90 . -.<br>80 .... 0, ".','j.....;.....; ;...............<br>:s. .... , ..... ; ;<br>80.<br>og ,. *, *S,<br>* S~~~~~~%0<br>Z .,... ';.e.;;.............................. ............. t<br>40- - ---- --- I----- ----- ---- -- -------<br>30 ... ,,,,,,,,,,,,,,,<br>01/21 02/04 02/18 03/17 04X07 04/21 0it5 05119 066 06/23 07/07 07/21 0804 0818<br>Date<br>| Market Volume Volume. .State<br><!-- End of picture text -->

64
<!-- Start of picture text --> Average Prices, Cigarette<br>(Deceml,er 1991 -- August 1992)<br>40.. .... ................................. ............................................... ..............<br>35. .. ............ ..................... ............... ......................... ... ................... ............ ..../<br>45~~~~~~44<br>.................. .. ............. .. .. . ....... ... >.:<br>.---, ........ ..;;;; .... ;..................................................<br>Dec9l 01/2 02J11 02125 03J31 04/14 04M2 OW/2 06102 0616' 0630 07/14 o7r2B owl moa2<br>Date<br>| Market Price ..... State Price<br><!-- End of picture text -->

_65_
<!-- Start of picture text --> Volume in Monitored Outlets: Cigaretus<br>(01/21/92-08/25/92)<br>300-<br>-10<br>S. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~.<br>200- 0 -4 -- .- -- . ................. . \ .. - --- -.. . ...... . ..<br>0<br>a0 ''''- --- ,,, '''''''''''' -- - - vwut...... ' .4we,,,,,;,,,,,,,,,-<br>* 6~~~~~~~6<br>01/21 02/04 02/18 03117 0407 04J21 05/05 05/19 06z09 06n2 07/'07 07t21 08/0 0W8n<br>Date<br>|-Market Volume SeVlm .......................... |m ou<br><!-- End of picture text -->
# Policy Research Working Paper Series

|Title|Author|Date|Contact<br>for paper|
|---|---|---|---|
|WPS**1**15 Looking at the Facts: What We Know<br>about Policy and Growth from Cross-<br>Country Analysis|Ross Levine<br>Sara Zervos|March 1993|D. Evans<br>38526|
|WPS1116 Implications<br>of Agricultural<br>Trade<br>Liberalization<br>for the Developing<br>Countries|Antonio Salazar Brandao<br>Will Martin|March 1993|D. Gustafson<br>33714|
|WPS1117 Portfolio Investment<br>Flows to<br>Emerging Markets|Sudarshan<br>Gooptu|March 1993|R. Vo<br>31047|
|WPS1118 Trends in Retirement<br>Systems and<br>Lessons for Reform|Olivia S. Mitchell|March 1993|ESP<br>33680|
|WPS1119 The North American Free Trade<br>Agreement:<br>Its Effect on South Asia|Raed Safadi<br>Alexander Yeats|March 1993|J. Jacobson<br>33710|
|WPS1120 Policies for Coping with Price<br>Uncertainty<br>for Mexican Maize|Donald F. Larson|March 1993|D. Gustafson<br>33714|
|WPS1 121 Measuring<br>Capital Flight: A Case<br>Study of Mexico|Harald Eggerstedt<br>Rebecca<br>Brideau Hall<br>Sweder van Wijnbergen|March 1993|H. Abbey<br>80512|
|WPS1122 Fiscal Decentralization<br>In Transition<br>Economies:<br>Toward a Systemic<br>Analysis|al Richard Bird<br>Christine Wallich|March 1993|B. Pacheco<br>37033|
|WPS1123 Social Development<br>isEconomic<br>Development|Nancy Birdsall|April 1993|S. Rothschild<br>37460|
|WPS1I24 A New Database<br>on Human Capital<br>Stock: Sources. Methodology,<br>and<br>Results|Vikram Nehru<br>Eric Swanson<br>Ashutosh Dubey|April 1993|M. Coleridge-<br>Taylor<br>33704|
|WPS**1**25 Industrial Development<br>and the<br>Environment<br>inMexico|Adriaan Ten Kate|April 1993|C.Jones<br>37699|
|WPS1126 The Costs and Benefits of Slovenian<br>Independence|Milan Cvikl<br>Evan Kraft<br>Milan Vodopivec|April 1993|S. Moussa<br>39019|
|WPS1127 How International<br>Economic Links<br>Affect East Asia|Vikram Nehru|April 1993|M. Coleridge-<br>Taylor<br>33704|
|WPS1128 The lntemational Ocean Transport<br>Industry in Crisis: Assessing<br>the<br>Reasons and Outlook|Hans JOrgen Peters|April 1993|J. Lucas-<br>Walker<br>31078|
# Policy Research Working Paper Series

||Ttlte|Author|Date|Contact<br>for paper|
|---|---|---|---|---|
|WPS**1**29|How Policy Changes Affected Cocoa<br>Sectors In Sub-Saharan<br>African<br>Countries|Jonathan R. Coleman<br>Takamasa<br>Akiyama<br>Panos N. Varangis|April 1993|G. llogon<br>33732|
|WPS1 130|Poverty and Policy|Michael Lipton<br>Martin Ravallion|April 1993|P. Cook<br>33902|
|WPSI 131|Prices and Protocols in Public<br>Health Care|Jeffrey S. Hammer|April 1993|J. S. Yang<br>81418|
|WPS**1**32|An Analysis of Repressed<br>Inflation<br>in Three Transitional<br>Economies|Andrew Feltenstein<br>Jiming Ha|April 1993|E. Zamora<br>33706|
|WPS113|3 Macroeconomic<br>Framework<br>for an<br>Oil-Based Economy:<br>The Case of<br>Bahrain|Ibrahim Elbadawi<br>Nader Maid|April 1993|A.Maranon<br>31450|
|WPS113|4 Managing<br>a Nonrenewable<br>Resourc<br>Savings and Exchange-Rate<br>Policie<br>in Bahrain|e: Ibrahim A. Elbadawi<br>s Nader Maid|April 1993|A. Maranon<br>31450|
|WPS11|35<br>Inflation in Czechoslovakia,<br>1985-91|Zdenek Drabek<br>Kamil Janacek<br>Zdenek Tuma|May 1993|E. Zamora<br>33706|
|WPS**1**36|The Dynamic Behavior<br>of Quota<br>License Prices: Theory and Evidenc<br>from the Hong Kong Apparel Quotas|Kala Krishna<br>e Ling Hui Tan|May 1993|D. Gustafson<br>33714|
|WPS1<br>137|Railway Reform in the Central and<br>Eastern EuropeanZconomies|Philip W. Blackshaw<br>Louis S. Thompson|May 1993|TWUTD<br>31005|
|WPS1 138|The Economic<br>Impact of Military<br>Expenditures|Daniel Landau|May 1993|C. Jones<br>37699|
|WPS**1**39|Should Sub-Saharan<br>Africa Expand<br>Cotton Exports?|Jonathan R. Coleman<br>M. Elton Thigpen|May 1993|G. llogon<br>33732|
|WPS114|0 How Retail Food Markets Responde<br>to Price Liberalizatio**n**<br>i Russia<br>after January 1992|d Bruce Gardner<br>Karen M. Brooks|May 1993|C. Spooner<br>32116|