Modelling price formation and dynamics in the Ethiopian maize market

Abstract

In response to the sharp rise in domestic grain prices of 2008, the Ethiopian government introduced a wide range of policy instruments to tame the soaring domestic food prices. It is generally argued that before embarking on any intervention in domestic grain market, better understanding of price formation and possible scenarios of the dynamic grain market environment is crucial for policymakers to make informed decisions. This study aimed at examining the price formation and dynamics in the Ethiopian maize market. Furthermore, this article empirically investigate spatial maize market linkages and test maize price leadership role in order to understand as to whether or not there is a central maize market that dictate and lead price information flow over regional maize markets in Ethiopia.