MARKET COINTEGRATION AND RED CHILI PRICE BEHAVIOR BETWEEN WHOLESALERS AND TRADITIONAL MARKETS

Abstract

Chili is a very important food ingredient for a large part of the population in Asia including Indonesia, so it is sensitive to price changes. Research on market cointegration and red chili price behavior between wholesalers and traditional markets in NTT has not been found. This study uses the Johansen model cointegration approach and Granger causality with 96 time series price data for red chilies. This analysis measures the relationship between price changes in wholesalers and price changes in traditional markets. Using graphical methods and coefficient of variation (CV) to observe and measure price behavior patterns. This study contributes to the decision making to face the risk of price volatility. The results of the study found that changes in the price of red chili in traditional markets have an effect on prices in wholesalers. but it does not happen otherwise, meaning that there is no causality relationship. Wholesalers control the price of chili in traditional markets to the end consumers and the price variations in wholesalers are higher than in traditional markets. Price behavior in wholesalers and traditional markets exhibits the same pattern. Seasonal influence is not the main determinant of price fluctuations. It is suspected that the market infrastructure and the smoothness of the shifting chains are one of the determinants of price fluctuation. Improvements in infrastructure and market information are needed in order for market players to plan and make the right decisions.

Keywords

• wholesalers
• traditional markets
• cointegration
• price fluctuation
• price behaviour