On trade efficiency in the Ethiopian agricultural markets
AbstractThe availability of enabling institutions, information systems and infrastructure is a precondition to enhance agricultural markets’ efficiency, and make market actors less vulnerable to price instability. This paper investigates whether the focus on institutional and technological upgrading is enough to make Ethiopian agricultural markets more efficient. In particular, given that a requirement for exchange efficiency is the lack of unexploited mutually beneficial spatial arbitrage opportunities, we look for evidence of increasing returns to transaction size and returns to scale in transport using detailed trader surveys collected in 2001 and 2007. Whilst transport costs could be reduced by assembling loads and avoiding trans-shipments for the transporters, we find no evidence that transport and handling costs are a source of increasing returns to transaction size. Hence, the presence of many small market intermediaries is not a source of inefficiency in Ethiopia, and concentration in market intermediation is not necessary for social efficiency.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 123rd Seminar, February 23-24, 2012, Dublin, Ireland with number 122512.
Date of creation: 23 Feb 2012
Date of revision:
Ethiopia; market efficiency; International Development; Risk and Uncertainty; O13; Q13;
Find related papers by JEL classification:
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
This paper has been announced in the following NEP Reports:
- NEP-AFR-2012-05-15 (Africa)
- NEP-AGR-2012-05-15 (Agricultural Economics)
- NEP-ALL-2012-05-15 (All new papers)
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