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Media type:
E-Article
Title:
Competition and Entry in Agricultural Markets: Experimental Evidence from Kenya
Contributor:
Bergquist, Lauren Falcao;
Dinerstein, Michael
imprint:
American Economic Association, 2020
Published in:American Economic Review
Language:
English
DOI:
10.1257/aer.20171397
ISSN:
0002-8282
Origination:
Footnote:
Description:
<jats:p> African agricultural markets are characterized by low farmer revenues and high consumer food prices. Many have worried that this wedge is partially driven by imperfect competition among intermediaries. This paper provides experimental evidence from Kenya on intermediary market structure. Randomized cost shocks and demand subsidies are used to identify a structural model of market competition. Estimates reveal that traders act consistently with joint profit maximization and earn median markups of 39 percent. Exogenously induced firm entry has negligible effects on prices, and low take-up of subsidized entry offers implies large fixed costs. We estimate that traders capture 82 percent of total surplus. (JEL L13, O13, Q11, Q12, Q13) </jats:p>