Regulations, brokers, and interlinkages: The institutional organization of wholesale markets in India
AbstractThere is a vigorous debate on the liberalization of heavily regulated agricultural markets in India. A crucial institutional characteristic is the role of state regulated brokers in wholesale markets. Relying on data from a unique survey in Uttarakhand, a state in North-India, we find that regulations on margins are ineffective as most brokers charge rates that significantly exceed the regulated ones. We also find that a majority of farmers self-select into long-term relationships with brokers. These relationships allow some of the farmers to interlink credit and insurance markets to the agricultural output market. This interlinkage does however not appear to be an instrument for farmer exploitation (as it does not lead to worse inputs, high interest rates, or lower implicit output prices), but is seemingly an extra service by brokers as to establish farmer loyalty to him and thus to ensure future supplies.
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Bibliographic InfoPaper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 28811.
Date of creation: 2011
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India; agricultural marketing; brokers; interlinkages;
Other versions of this item:
- Bart Minten & Anneleen Vandeplas & Johan Swinnen, 2011. "Regulations, Brokers, and Interlinkages: The Institutional Organization of Wholesale Markets in India," Journal of Development Studies, Taylor & Francis Journals, vol. 48(7), pages 864-886, May.
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-11-01 (Agricultural Economics)
- NEP-ALL-2011-11-01 (All new papers)
- NEP-REG-2011-11-01 (Regulation)
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