The Impact of Agricultural Market Information System in Bosnia & Herzegovina on Market Integration: Assymetric Information and Market Performance

Abstract

When identical commodities are being exchanged between two or more markets, the prices of those commodities should be equal according to the law of one price, with the only difference in the transport cost between those markets. Therefore, in the perfectly integrated economy, local demand has no impact onto the formation of the market price, and once changes in local demand occur, the prices are being equalized in the national market through efficient allocation of resources (Pareto efficiency).