Analysis on spatial conduction effect of Chinese litchi price

This paper aims to find out whether there is market linkage between litchi prices in different provinces of our country and the horizontal-related price conduction mechanism between litchi producing areas. A vector autoregressive model was established using data on litchi’s purchase price in Hainan，Guangdong，Guangxi Province. Granger causality analysis，pulse effect function and variance analysis were used to test the relationship between the prices based on VAR model. Results show that there is a strong price-conduction relationship between the purchase price of litchi in Hainan and Guangxi. The purchase price of litchi in Guangxi can help to predict the purchase price of litchi in Hainan，and the purchase price of litchi in Hainan also helps to predict the price of litchi in Guangxi. While the purchase price of litchi in Guangdong province tends not to be easily affected by the price of litchi in other regions and shows a strong independence. A joint warning mechanism of litchi price should be set up between Hainan province and Guangxi province. Besides，we should promptly publish information on the price of litchi and promote the circulation efficiency of litchi in local region.