Spatial pattern of Russia’s market integration

This paper studies the integration of regional goods markets in Russia over the period 2001–19, analysing the law of one price. The analysis involves all pairs of country’s regions, which provides a comprehensive spatial pattern of market integration. The region pairs are classified as belonging to one of four groups: perfectly integrated, conditionally integrated, not integrated but tending towards integration (converging), and neither integrated nor tending towards integration. On average, a region is found to be perfectly and conditionally integrated with 48.7% of other regions and tending towards integration with 3.3% of them. Comparisons of the European and Asian parts of Russia and other considerations suggest that geographical reasons explain the pattern obtained only partially. Apparently, idiosyncratic features of regional markets play a main role in non-integration.