Market Integration – An Exploratory Analysis of Price Patterns and Transport Costs

This dissertation provides an alternative perspective on the process of market integration by focusing on market integration within a nation's borders. The dissertation intends to go beyond traditional integration theory and examine various alternative approaches to market integration by using Lao PDR as an empirical example for assessing these alternative approaches empirically. The main objective with the dissertation is to find determinants for the spatial differences in prices between locations and quantify the importance of different variables influencing the final price of the studied homogenous retail product, one bottle of locally produced Beer Lao. The conceptual and theoretical framework used in this dissertation seeks to identify key actors at different geographical levels. The theoretical framework highlights transport costs as a major barrier to integration within the domestic economy. Thus, an explorative quantitative research approach based on a theoretical model is applied to study the national market for domestic freight services and the spatial price pattern of a homogenous retail product. Therefore, the empirical analysis is divided into three levels; a) an analysis of the determinants for domestic freight rates; b) an analysis focusing on identifying the major determinants of the spatial price patterns of one bottle of Beer Lao; and c) an analysis incorporating Lao PDR's geographical location neighboring China."