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Intermediaries, transport costs and interlinked transactions

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  • Tharakan, Joe
  • Lefèvre, Mélanie

Abstract

Transport costs play a key role in agricultural markets in developing countries and are one of the causes of poverty amongst farmers that are geographically isolated. Another characteristic of agricultural markets is that they often involve interlinked transactions. However, the existing theoretical literature on interlinked transactions does not take into account the existence of transport costs. This paper develops a model of input-output interlinked contracts between geographically dispersed farmers and a trader, whether this trader is for-profit or non-profit. We derive implications of imposing either uniform or mill pricing policies, as opposed to spatial price discrimination. Impact on profit, farmers' income, level of production, social welfare and regional disparities are investigated.

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  • Tharakan, Joe & Lefèvre, Mélanie, 2011. "Intermediaries, transport costs and interlinked transactions," CEPR Discussion Papers 8615, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8615
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    2. RUSSO, Federica & MOUCHART, Michel & WUNSCH, Guillaume, 2013. "Confounding and control in a multivariate system. An issue in causal attribution," LIDAM Discussion Papers CORE 2013068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. DI SUMMA, Marco, 2013. "The convex hull of the all-different system with the inclusion property: a simple proof," LIDAM Discussion Papers CORE 2013069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Moskalenko, Olga I. & Koronovskii, Alexey A. & Zhuravlev, Maksim O. & Hramov, Alexander E., 2018. "Characteristics of noise-induced intermittency," Chaos, Solitons & Fractals, Elsevier, vol. 117(C), pages 269-275.

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    More about this item

    Keywords

    Rural development; Spatial pricing; Transportation;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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