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Publication year
Competition and Entry in Agricultural Markets: Experimental Evidence from Kenya
Resource type
Authors/contributors
- Bergquist, Lauren Falcao (Author)
- Dinerstein, Michael (Author)
Title
Competition and Entry in Agricultural Markets: Experimental Evidence from Kenya
Abstract
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.
Publication
American Economic Review
Volume
110
Issue
12
Pages
3705-47
Date
2020-12
Citation
Bergquist, L. F., & Dinerstein, M. (2020). Competition and Entry in Agricultural Markets: Experimental Evidence from Kenya. American Economic Review, 110, 3705–3747.
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