ABSTRACT
The mid-1980s, correlation coefficients between levels and first differences of prices in different localities were almost universally used as the primary indicator of market integration. Market prices for Chinese industrial producer goods have diverged sharply from state plan prices and moreover have fluctuated over time. Regional market price patterns and trends can be reviewed using the main data base for this chapter, which consists of market transaction prices for a number of industrial goods in some large cities, covering the period from August 1984 to November 1987. A new and more sophisticated methodology for the analysis of market integration, still based on observed price data for different local markets, was developed by Martin Ravallion. But first a brief digression on the nature of the available price data and the adjustments made to facilitate quantitative analysis. Rejection of the short-run market integration hypothesis also means that effective, coordinated central price controls are not influencing price movements in local markets.
