Regional Price Dynamics and Market Integration in the U.S. Beef Industry: An Econometric Analysis

Abstract

The United States, a leading global producer and consumer of beef, continues to face substantial challenges in achieving price harmonization across its regional markets. This paper evaluates the validity of the Law of One Price (LOP) in the U.S. beef industry and investigates causal relationships among regional price dynamics. Through a series of econometric tests, we establish that regional price series are integrated of order one, displaying non-stationarity in levels and stationarity in first differences. The analysis reveals partial LOP compliance in the Northeast and West, while full convergence remains elusive at the national level. Although no region demonstrates persistent price leadership, Southern prices appear particularly sensitive to exogenous shocks. These findings reflect asymmetrical integration across U.S. beef markets and suggest the presence of structural frictions that hinder complete market unification.