Market of the Novosibirsk Oblast in the System of Regional Markets

This paper studies integration of the Novosibirsk Oblast market for final goods with markets of all other Russian regions. It considers an aggregated market represented by a basket of basic foods (staples basket). The law of one price serves as the criterion of market integration. It is the base for constructing time series models of the regional costs of the staples basket over 2001–2015 relative to its cost in the Novosibirsk Oblast. Regional markets are divided into four groups: perfectly integrated with the Novosibirsk Oblast market, conditionally integrated with it, not integrated but tending towards integration, and neither integrated nor tending towards integration. Nonlinear time series models with asymptotically decaying trends describe the movement towards integration (price convergence).