Spatial market integration during a pandemic: Evidence from food markets in Nigeria

This paper uses comprehensive and long time series monthly food price data and a panel dyadic regression framework to evaluate the impact of the COVID-19 pandemic and associated policy responses on spatial market integration across a diverse set of food items in Nigeria. The empirical results reveal several important insights. First, we show that a significant slowdown in the speed of adjustment and price transmission occurred during the pandemic. For some food items, the speed of adjustment and, by implication, spatial market integration weakened by two- to-threefold after the outbreak of the pandemic. The effect was especially pronounced for perishable food items. Second, lockdown measures and the spread of the pandemic triggered additional dispersion in market prices across markets. For example, lockdown measures were associated with a 5%-10% reduction in the speed of readjustment toward long-term equilibrium. Third, additional underlying attributes of markets, including lack of access to digital infrastructure and distance between markets, exacerbated impacts associated with the pandemic. For instance, access to Internet service reduced the slowdown in the speed of adjustment caused by the pandemic, but longer distances between market pairs induced greater slowdown in the speed of price transmission. Our findings offer important insights for revitalizing the efficiency of food markets affected by the pandemic. The heterogenous impacts of the pandemic across value chains and markets reinforce the need to properly target post-pandemic recovery interventions and investments. Finally, we offer some insights to reduce the vulnerability of food and market systems to disruptions in future pandemics or similar phenomena that inhibit food marketing and trade.

Automated summary

This paper examines the impact of the COVID-19 pandemic and associated policy responses on spatial market integration in Nigeria's diverse food items. The findings indicate that the pandemic resulted in a significant slowdown in the speed of adjustment and price transmission, particularly for perishable food items. Lockdown measures and the spread of the pandemic also led to increased dispersion in market prices. Additionally, factors such as lack of access to digital infrastructure and distance between markets exacerbated the impacts. The study provides valuable insights for revitalizing food markets affected by the pandemic and reducing vulnerability to future disruptions.