Interlinked Transactions and Competition: Experimental Evidence from Cocoa Markets

This study uses an experiment in Sierra Leone, which subsidizes traders who buy cocoa from farmers

From:
Foreign, Commonwealth & Development Office
Published
21 October 2020
Country:
Sierra Leone
Document Type:
Working Paper
Theme:
Agriculture and Economic Growth
First published:
1 May 2020
Authors:
Casaburi, L and Reed, T

Abstract

Interlinked transactions in which output prices are determined jointly with the terms of credit are an important feature of many business relationships. In these instances, understanding competition requires information on credit, as well as prices. We illustrate this idea using an experiment in Sierra Leone, which subsidizes traders who buy cocoa from farmers. Subsidized traders pass value to farmers either through cocoa prices or the provision of credit. A model demonstrates how the experiment can inform estimation of the degree of differentiation among traders, which is found to be low. Additional results on the pass-through of world price shocks, market size, and quantity purchased by traders also suggest that the market for farmers바카라 사이트™ output is competitive.

This is an output of the World Bank바카라 사이트™s Strategic Research Program

Citation

Casaburi, Lorenzo; Reed, Tristan. (2020) 바카라 사이트śInterlinked Transactions and Competition: Experimental Evidence from Cocoa Markets바카라 사이트ť. May 2020. Revision of BREAD Working Paper no. 508바카라 사이트ť

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Published 21 October 2020
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