Development Economics Seminar

Du 13/12/2023 de 16:30 à 18:00

R2.21

DILLON Andrew (Northwestern University )

Making Markets: Experiments in Agricultural Input Market Formation

Making markets is central to theories of development. In our rural Malian study setting, seventy percent of smallholder farmers did not have village-level access to an ag-input dealer in the twelve previous months. We create rural input markets with a village input fair (VIF). Our experiment estimates the effect of forward or commitment contracts depending on the market timing when inputs can be purchased or ordered (at planting or post-harvest season), the up-front deposit a farmer pays an ag-input dealer to order inputs for delivery during the planting season (the level of commitment), and whether credit is offered during the village input fairs (to test the implications of liquidity). We estimate the intention-totreat effects of differences in these market structures on prices, market volume, consumer demand, and agricultural production and revenue. The results suggest that ordering inputs in advance substantially raise market sales when deposit amounts are low (10 percent versus 50 percent deposit). The credit offers increase sales by USD 63 in the 10 percent deposit group which increases fertilizer purchased by 140 kg at market prices. Village input fairs led to increases in input utilization at the extensive and intensive margin. We conclude that innovations in market organization resulted in farmer intensification rather than diversification of production with strong effects on farmer revenue. We do not observe price discrimination in VIFs relative to control group or spot market prices.