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An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia

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Author Info
Marc F. Bellemare
Christopher B. Barrett

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Abstract

Do rural households in developing countries make market participation and volume decisions simultaneously or sequentially? This article develops a two-stage econometric method to test between these two competing hypotheses regarding household-level marketing behavior. The first stage models the household's choice of whether to be a net buyer, autarkic, or a net seller in the market. The second stage models the quantity bought (sold) for net buyers (sellers) based on observable household characteristics. Using household data from Kenyan and Ethiopian livestock markets, we find evidence in favor of sequential decision making, the welfare implications of which we discuss. Copyright 2006 American Agricultural Economics Association.

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Article provided by American Agricultural Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 88 (2006)
Issue (Month): 2 (05)
Pages: 324-337
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Handle: RePEc:bla:ajagec:v:88:y:2006:i:2:p:324-337

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004. "Stochastic wealth dynamics and risk management among a poor population," Economic Journal, Royal Economic Society, vol. 114(498), pages 750-777, October. [Downloadable!] (restricted)
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  2. Barrett, Christopher B. & Luseno, Winnie K., 2004. "Decomposing producer price risk: a policy analysis tool with an application to northern Kenyan livestock markets," Food Policy, Elsevier, vol. 29(4), pages 393-405, August. [Downloadable!] (restricted)
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  3. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Blackwell Publishing, vol. 14(1), pages 53-68, February. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Takeshima, Hiroyuki, 2008. "Behavior of subsistence producers in response to technological change- The elasticity of cassava production and home consumption in Benin," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6108, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. Guirkinger, Catherine & Boucher, Steve, 2007. "Credit Constraints and Productivity in Peruvian Agriculture," Working Papers 6882, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  3. Shilpi, Forhad & Umali-Deininger, Dina, 2007. "Where to sell ? market facilities and agricultural marketing," Policy Research Working Paper Series 4455, The World Bank. [Downloadable!]
  4. Stephens, Emma C. & Barrett, Christopher B., 2006. "Missing credit markets and commodity marketing behavior," 2006 Annual meeting, July 23-26, Long Beach, CA 21347, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  5. Kan, Iddo & Kimhi, Ayal & Lerman, Zvi, 2006. "Farm Output, Non-Farm Income, And Commercialization In Rural Georgia," Discussion Papers 7179, Hebrew University of Jerusalem, Department of Agricultural Economics and Management. [Downloadable!]
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  6. Balsevich, Fernando & Schuetz, Paul & Perez, Edwin, 2006. "Cattle Producer' Participation in Market Channels in Central America: Supermarkets, Processors, and Auctions," Staff Papers 11482, Michigan State University, Department of Agricultural, Food, and Resource Economics. [Downloadable!]
  7. Porto, Guido, 2008. "Agro-manufactured export prices, wages and unemployment," Policy Research Working Paper Series 4489, The World Bank. [Downloadable!]
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  8. Deininger, Klaus & Jin, Songqing, 2007. "Land rental markets in the process of rural structural transformation : productivity and equity impacts in China," Policy Research Working Paper Series 4454, The World Bank. [Downloadable!]
  9. Bellemare, Marc F. & Barrett, Christopher B. & Osterloh, Sharon M., 2004. "Household-Level Livestock Marketing Behavior Among Northern Kenyan and Southern Ethiopian Pastoralists," Working Papers 14749, Cornell University, Department of Applied Economics and Management. [Downloadable!]
  10. Gorton, Matthew & Sauer, Johannes & Supatpongkul, Pajaree, 2009. "Investigating Thai Shopping Behaviour: Wet-Markets, Supermarkets and Food Quality," 83rd Annual Conference, March 30-April 1, 2009, Dublin, Ireland 51054, Agricultural Economics Society. [Downloadable!]
  11. Gopinath, Munisamy & Sheldon, Ian & Echeverria, Rodrigo, 2007. "Firm Heterogeneity and International Trade: Implications for Agricultural and Food Industries," Trade Policy Issues Papers 9349, International Agricultural Trade Research Consortium. [Downloadable!]
  12. Rios, Ana R. & Masters, William A. & Shively, Gerald E., 2008. "Linkages between Market Participation and Productivity: Results from a Multi-Country Farm Household Sample," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6145, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  13. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6592, European Association of Agricultural Economists. [Downloadable!]
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