Price Transmission and Causality in major onion markets of India

To investigate the interdependence between Indian onion markets in terms of wholesale price, the present study was conducted in three major onion markets in India viz., Mumbai, Nashik and Delhi. The long term monthly data, from March, 2003 to September, 2015has been collected from the Agriculture Marketing Information System Network. The current study focuses to explore the degree of market integration through cointegration analysis on the wholesale monthly prices of onion in three markets.The direction of information flow was determined by using Granger Causality test. It is found that in Delhi and Mumbai markets, price transmissions were bi-directional. The study reveals that Nashik market is dominating in terms of price determination. The empirical investigation also suggests for a very close observation on different market behavioural pattern since, “news” in one market may impact other market through the number of interdependencies.