An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia
AbstractDo rural households in developing countries make market participation and volume decisions simultaneously or sequentially? This article develops a two-stage econometric model that allows testing between these two competing hypotheses regarding household-level market 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 Kenya and Ethiopia on livestock markets, we find evidence in favor of sequential decision-making, the welfare implications of which we discuss.
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Bibliographic InfoPaper provided by Cornell University, Department of Applied Economics and Management in its series Working Papers with number 14748.
Date of creation: 2005
Date of revision:
Other versions of this item:
- Marc F. Bellemare & Christopher B. Barrett, 2006. "An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 324-337.
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.:
- Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
- Barrett, Christopher B. & Luseno, Winnie K., 2002.
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14753, Cornell University, Department of Applied Economics and Management.
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- Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004.
"Stochastic wealth dynamics and risk management among a poor population,"
Royal Economic Society, vol. 114(498), pages 750-777, October.
- Lybbert, Travis J. & Barrett, Christopher B. & Desta, Solomon & Coppock, D. Layne, 2002. "Stochastic Wealth Dynamics And Risk Management Among A Poor Population," Working Papers 14736, Cornell University, Department of Applied Economics and Management.
- Klein, Roger & Sherman, Robert, 1997. "Estimating new product demand from biased survey data," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 53-76.
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