Advanced Search
MyIDEAS: Login to save this paper or follow this series

Market institutions, transaction costs, and social capital in the Ethiopian grain market:

Contents:

Author Info

  • Gabre-Madhin, Eleni Z.
Registered author(s):

    Abstract

    Using a New Institutional Economics framework, this research report addresses a fundamental aspect of markets: how do buyers and sellers find each other and coordinate the transfer of goods? The report quantifies the transaction costs related to search faced by traders in Ethiopia and analyzes the role of brokers in minimizing these transaction costs. The transaction costs of market search are significant in the Ethiopian grain market. Estimated as the opportunity cost of labor time spent searching for a trading partner and the opportunity cost of holding capital fixed during that search, these costs represent one-fifth of all marketing costs. This research report demonstrates that traders minimize their transaction costs of search by using brokers, who enable them to exchange with unknown partners. The report also shows that at the level of the grain economy as a whole, brokers significantly increase the total economic welfare by enabling a more efficient allocation of search effort by traders. Thus, traders with relatively higher search efficiency and lower search costs choose to search on their own, while traders with lower search efficiency and higher search costs choose to use a broker.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.ifpri.org/sites/default/files/publications/rr124.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by International Food Policy Research Institute (IFPRI) in its series Research reports with number 124.

    as in new window
    Length:
    Date of creation: 2001
    Date of revision:
    Handle: RePEc:fpr:resrep:124

    Contact details of provider:
    Postal: 2033 K Street, NW, Washington, DC 20006
    Phone: 202-862-5600
    Fax: 202-467-4439
    Email:
    Web page: http://www.ifpri.org/
    More information through EDIRC

    Related research

    Keywords: Grain trade Ethiopia.; Institutional economics.; Grain Ethiopia Marketing.;

    References

    References listed on IDEAS
    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.:
    as in new window
    1. Zeller, Manfred & Ahmed, Akhter U. & Babu, Suresh Chandra & Broca, Sumiter S. & Diagne, Aliou & Sharma, Manohar, 1996. "Rural finance policies for food security of the poor," FCND discussion papers, International Food Policy Research Institute (IFPRI) 11, International Food Policy Research Institute (IFPRI).
    2. Yavas, Abdullah, 1992. "Marketmakers versus matchmakers," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 2(1), pages 33-58, March.
    3. Ravallion, Martin & Dearden, Lorraine, 1988. "Social Security in a "Moral Economy": An Empirical Analysis for Java," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 36-44, February.
    4. Steve Tadelis, 1997. "What's in a Name? Reputation as a Tradeable Asset," Working Papers, Stanford University, Department of Economics 97033, Stanford University, Department of Economics.
    5. Narayan, Deepa & Pritchett, Lant, 1999. "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 871-97, July.
    6. Sattinger, Michael, 1995. "Search and the Efficient Assignment of Workers to Jobs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 283-302, May.
    7. Norton, Seth W, 1992. "Transaction Costs, Telecommunications, and the Microeconomics of Macroeconomic Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 175-96, October.
    8. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 69, pages 213.
    9. Townsend, Robert M, 1978. "Intermediation with Costly Bilateral Exchange," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 45(3), pages 417-25, October.
    10. Nabli, Mustapha K. & Nugent, Jeffrey B., 1989. "The New Institutional Economics and its applicability to development," World Development, Elsevier, Elsevier, vol. 17(9), pages 1333-1347, September.
    11. North, Douglass C., 1989. "Institutions and economic growth: An historical introduction," World Development, Elsevier, Elsevier, vol. 17(9), pages 1319-1332, September.
    12. Negassa, Asfaw & Jayne, Thomas S., 1997. "The Response of Ethiopian Grain Markets to Liberalization," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 55595, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Minten, Bart & Stifel, David & Tamru, Seneshaw, 2012. "Structural transformation in Ethiopia: Evidence from cereal markets:," ESSP working papers, International Food Policy Research Institute (IFPRI) 39, International Food Policy Research Institute (IFPRI).
    2. Schmidt, Emily & Chinowsky, Paul & Robinson, Sherman & Strzepek, Kenneth M., 2014. "Determinants and impact of sustainable land and watershed management investments: A systems evaluation in the Blue Nile Basin, Ethiopia:," ESSP working papers, International Food Policy Research Institute (IFPRI) 62, International Food Policy Research Institute (IFPRI).
    3. Mina Baliamoune-Lutz & George Mavrotas, 2009. "Aid Effectiveness: Looking at the Aid-Social Capital-Growth Nexus," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 13(s1), pages 510-525, 08.
    4. Bumb, Balu L. & Johnson, Michael E. & Fuentes, Porfirio A., 2011. "Policy options for improving regional fertilizer markets in West Africa:," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1084, International Food Policy Research Institute (IFPRI).
    5. Latynskiy, Evgeny & Berger, Thomas, 2012. "An Agent-Based Network Approach For Understanding, Analyzing And Supporting Rural Producer Organizations In Agriculture," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012, German Association of Agricultural Economists (GEWISOLA) 137383, German Association of Agricultural Economists (GEWISOLA).
    6. Shiimi, T. & Taljaard, Pieter R. & Jordaan, Henry, 2010. "Transaction Costs and Cattle Farmers' Choice of Marketing Channels in North-Central Namibia," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Afri 96641, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    7. Quattri, Maria & Ozanne, Adam & Beyene, Seneshaw Tamru, 2012. "The brokerage institution and the development of agricultural markets: New evidence from Ethiopia," ESSP working papers, International Food Policy Research Institute (IFPRI) 36, International Food Policy Research Institute (IFPRI).
    8. Gebremedhin, Berhanu & Jaleta, Moti, 2010. "Commercialization of Smallholders: Is Market Participation Enough?," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Afri 96159, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    9. Minten, Bart & Tamru, Seneshaw & Engida, Ermias & Kuma, Tadesse, 2013. "Using evidence in unraveling food supply chains in Ethiopia: The supply chain of teff from major production areas to Addis Ababa:," ESSP working papers, International Food Policy Research Institute (IFPRI) 54, International Food Policy Research Institute (IFPRI).
    10. Shiferaw, Bekele & Obare, Gideon & Muricho, Geoffrey, 2006. "Rural institutions and producer organizations in imperfect markets: experiences from producer marketing groups in semi-arid eastern Kenya," CAPRi working papers, International Food Policy Research Institute (IFPRI) 60, International Food Policy Research Institute (IFPRI).
    11. Kornher, Lukas & Kalkuhl, Matthias, 2013. "Food price volatility in developing countries and its determinants," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156132, German Association of Agricultural Economists (GEWISOLA).
    12. Minten, Bart & Tamru, Seneshaw & Engida, Ermias & Kuma, Tadesse, 2013. "Ethiopia’s value chains on the move: The case of teff:," ESSP working papers, International Food Policy Research Institute (IFPRI) 52, International Food Policy Research Institute (IFPRI).
    13. Diao, Xinshen & Pratt, Alejandro Nin & Ghautam, Madhur & Keough, James & Chamberlin, Jordan & You, Liangszi & Puetz, Detlev & Resnick, Danielle & Yu, Bingxin, 2005. "Growth options and poverty reduction in Ethiopia," DSGD discussion papers 20, International Food Policy Research Institute (IFPRI).
    14. Woldu, Thomas & Abebe, Girum & Lamoot, Indra & Minten, Bart, 2013. "Urban food retail in Africa: The case of Addis Ababa, Ethiopia," ESSP working papers, International Food Policy Research Institute (IFPRI) 50, International Food Policy Research Institute (IFPRI).
    15. Rashid, Shahidur & Negassa, Asfaw, 2011. "Policies and performance of Ethiopian cereal markets:," ESSP working papers, International Food Policy Research Institute (IFPRI) 21, International Food Policy Research Institute (IFPRI).
    16. Byerlee, Derek & Spielman, David J. & Alemu, Dawit & Gautam, Madhur, 2007. "Policies to promote cereal intensification in Ethiopia: A review of evidence and experience," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 707, International Food Policy Research Institute (IFPRI).

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:fpr:resrep:124. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.