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Agricultural Price Seasonality and Market Failure: Examining the Net Seller Household and the Net Benefit Ratio Definition

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  • Vergez, Antonin
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    Abstract

    On the basis of a household typology distinguishing between net sellers, net buyers and self sufficient, the Net Benefit Ratio (NBR), defined by Deaton (1989), is used to approximate households' first order welfare variations when price change. In this paper, we discuss both the typology's criteria and the classic formula of NBR, since they are based a) on produced and consumed quantities rather than real marketed volumes and b) on a unique selling and buying price for all surveyed households. We propose another definition of a net seller and a new NBR expression allowing the analyst to take into account market failures (MF) and price seasonality (PS), which are two constancies in developing countries. We use two sets of data (from Mexico and Mali), to show that, if considering MF and PS, (1) the household typology can be partly reconfigured and (2) the distribution of the NBR over the household income profile slightly change. Yet, if the applied use of this reformulated NBR could contribute to get more precise impacts assessments, it implies to collect more data while doing surveys, by recording every market transactions of each household (bought, sold quantities and related prices).

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 106th Seminar, October 25-27, 2007, Montpellier, France with number 7911.

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    Date of creation: 2007
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    Handle: RePEc:ags:eaa106:7911

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    Related research

    Keywords: household welfare; food crop; net buyer; net seller; net benefit ratio; price seasonality; survey; Consumer/Household Economics; Marketing; D12; C14; Q12; D31; Q17; Q18;

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    1. Bardhan, Pranab, 2005. "Globalization and Rural Poverty," Working Paper Series RP2005/30, World Institute for Development Economic Research (UNU-WIDER).
    2. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
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    8. Jayne, T S, 1994. "Do High Food Marketing Costs Constrain Cash Crop Production? Evidence from Zimbabwe," Economic Development and Cultural Change, University of Chicago Press, vol. 42(2), pages 387-402, January.
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    12. Steven Were Omamo, 1998. "Transport Costs and Smallholder Cropping Choices: An Application to Siaya District, Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 116-123.
    13. Ravallion, Martin, 1989. "Do price increases for staple foods help or hurt the rural poor?," Policy Research Working Paper Series 167, The World Bank.
    14. Hoekman, Bernard & Michalopoulos, Constantine & Schiff, Maurice & Tarr, David, 2001. "Trade policy reform and poverty alleviation," Policy Research Working Paper Series 2733, The World Bank.
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