In spite of extensive trade reforms, markets for goods and services are not fully integrated across countries. Less appreciated also is that product markets within countries are frequently not integrated. Barriers to trade within countries are shown to be as important in preventing product market from integrating as barriers between countries. This evidence of within-country market segmentation is largely based on data from developed countries. Yet market segmentation is likely to be greater between and within developing countries that face large infrastructure, trade facilitation, tariff and other regulatory barriers than between and within developed countries. This thesis uses newly obtained micro-price and tariff data to extend the price-based empirical evidence of product market integration in a developing country, namely Zambia, by examining the influence of trade costs, tariff reform and tradability on internal price dispersion. The main aim of this thesis is to examine how internal trade costs and exposure to external competition affect domestic prices and internal product market integration using Zambia as a case study of a developing country in Sub-Saharan Africa. The empirical analysis is conducted in four inter-related papers.
