The study focuses on the spatial Cereal price transmission of regional food prices in three Ethiopian regional markets: Somali, Harari, and Dire Dawa. Markets are chosen based on the availability of continuous time series price data covering at least eleven years and the Eastern part of Ethiopia near neighboring to each other. The existence of the spatial market integration of this regional market in the Eastern part of Ethiopia using available time series data from the CSA Monthly Reports were found to be high.. The data were analyzed using Johansen’s and Juseliusco-integration test and vector error correction model complemented by Granger causality Test. The findings of the study on conitegration results indicate that regional prices are spatially linked in the long run. But price cointegration was found on one cointegreting vector. The results of the Vector Error Correction Model (VECM) for the estimation of short run speed of adjustment on the variables toward their long run relationship 28 % of the deviations from long-run equilibrium are adjusted within the time period. Causality tests confirm that a unidirectional granger causality from Harari market price to Somali and bi-directional causality from Harari to Dire Dawa market prices seems to suggest that the Harari region is relatively dominant in terms of its influence on the determination of cereal market prices in other region.

Keywords: spatial market integration, cointegreting vector, Error Correction, Granger causality Test, Ethiopia.