EH.Net Abstracts in Economic History

                ABSTRACTS IN ECONOMIC HISTORY
                     (c) 2002 EH.Net
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Name:  Karl Gunnar Persson
Email:  karlgunnar.persson at econ.ku.dk
Institution:  Institute of Economics,University of
Copenhagen

Co-author:  none

Title:  'Mind the Gap!' Transport costs and price convergence in the 
19th century Atlantic economy

Internet Address of abstracted work: http://www.econ.ku.dk/kgp/  or 
http://www.econ.ku.dk/wpa/

By mail:
Institute of Economics
StudiestrÊde 6
DK-1455 Copenhagen K

Language:  English

Abstract:

This paper challenges the widely held view that sharply falling real 
transport costs closed the transatlantic gap in grain prices in the 
second half of the 19th century. Several new results emerge from an 
analysis of a new data set of weekly wheat prices and freight costs 
from New York to UK markets. Firstly, there was a decline in the 
transatlantic price gap but it was not sharp and the gap remained 
substantial. Secondly, the fall in the transatlantic price 
differential had more to do with improved market and marketing 
efficiency than with falling transport costs. Thirdly, spurious price 
convergence (or divergence) can appear if quality differences 
associated with allegedly homogeneous commodities like wheat are not 
controlled for.

Keywords: market integration, spatial price gaps

JEL Classification: N7


Bibliography: Persson, Karl Gunnar. "'Mind the Gap!': Transport Costs 
and Price Convergence in the 19th Century Atlantic Economy." Working 
papers from the Insitute of Economics, University of Copenhagen, 
No.02-02, 2002.

Subject:  S
Geographical Area:  0
Country/Region:  North Atlantic Economy
Time Period:  7

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