Effect of Transaction Costs on Seller Decisions among Small-Holder Cassava Farmers in South-Eastern Nigeria
AbstractA linear probability model (LPM) analysis of seller decisions selling cassava on-farm (farm-gate) or off-farm (market) was derived and estimated consistent with a sample 216 farm households. Variables of proportional transaction costs have different effects on off-farm and on-farm market participation decisions. The seller type decision revealed that coefficients for have a personal means of transport, road conditions to the nearest town and marketing experience were positive and significantly related to increase in off-farm cassava sellers at 5% level of probability. The coefficient for distance from the house to the farm was negatively and significantly related to increase in farmers selling off-farm at 1% level of probability. The coefficients for crop transportation costs, distance to the nearest town, distance from the house to the farm and yield were negative and significant at 5% level of probability. These decisions to participate as an off-farm or on-farm seller were as a result of proportional transaction costs associated with participating in the market. It was found that unexpected transaction costs inhibit farm households from selling off-farm. The results therefore calls for policies aimed at infrastructural development especially on roads and establishment of bulking centers to mitigate transportation costs.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26120.
Date of creation: 10 Aug 2010
Date of revision:
Transaction Costs; Seller Decisions and Cassava Farmers;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D2 - Microeconomics - - Production and Organizations
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