Markets and Trade Glossary

FEWS NET is a USAID-funded activity. The authors' views expressed in this publication do not necessarily reflect the view of the United States Agency for International Development or the United States Government. Anomaly – is a deviation from the norm or average. Arbitrage – is taking advantage of a price differential. The two most common types of arbitrage related to food security are spatial arbitrage (where commodities are moved from areas or markets with lower prices to areas or markets with higher prices and the difference exceeds the transfer costs) and temporal arbitrage (where commodities are obtained, stored and sold at a point in the future when prices are expected to be higher and the difference exceeds the costs associated with the temporal transfer. Assembly market – is a market where smaller quantities of a commodity are accumulated or aggregated usually from different farmers and small scale traders. Assembly markets facilitate marketing and the movement of commodities as well as reduce the costs of marketing. They can also enable sellers of smaller surpluses from more remote locations to reach distant buyers. Budget share – is the portion (percentage) of the household budget spent on a given good (maize), service or grouped goods and services (food). This is essentially the same thing as expenditure shares. Commodity – is something tangible, that has value and can be exchanged. Commodities include food and cash crops, livestock, non‐food consumer items and even labor. Commodity flow – is the movement of commodities through space, generally from surplus to deficit areas. Complementary good (complement) – a commodity which is consumed in combination with another commodity. When demand for one commodity rises, demand for the other will rise as well. Conduct (market conduct) – refers to the patterns of behavior that traders follow and strategies that they employ in adjusting to the markets in which they sell or buy. Consumer basket – is a typical household's market (expenditure) basket of goods, services, fees, etc. It is used for tracking the prices of consumer goods and services and the overall cost of living. The basket may be comprised of the actual quantities of consumption goods or services acquired or used by households in some period. Sometimes, a consumer basket can also be made up from hypothetical quantities created. Consumer price index (CPI) – an index of consumer prices which measures the change in prices associated with a typical …