Law of one price in the Spanish olive oil market

José Ángel Roldán Casas, Rafaela Dios-Palomares

Abstract

The aim of this paper is the study of long-run market integration of olive oil in Spain and the testing of the Law of One Price (LOP) in this market. The study is carried out using multivariate cointegration methodology and applied to monthly data on olive oil prices in Spain (1987-2001) corresponding to the regions considered by the Spanish Ministry of Agriculture, Fisheries and Food. The results show that Spanish olive oil markets are highly integrated with the Northeast being the leading market. However, perfect integration cannot be accepted.

Keywords

Olive oil; cointegration; law of one price

Subject classification

Q11, C32, F15.

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