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The relevance of a rules-based maize marketing policy : an experimental case study of Zambia

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  • Abbink, Klaus
  • Jayne, Thomas S.
  • Moller, Lars C.

Abstract

Strategic interaction between public and private actors is increasingly recognized as an important determinant of agricultural market performance in Africa and elsewhere. Trust and consultation tend to positively affect private activity while uncertainty of government behavior impedes it. This paper reports on a laboratory experiment based on a stylized model of the Zambian maize market. The experiment facilitates a comparison between discretionary interventionism and a rules-based policy in which the government pre-commits itself to a future course of action. A simple precommitment rule can, in theory, overcome the prevailing strategic dilemma by encouraging private sector participation. Although this result is also borne out in the economic experiment, the improvement in private sector activity is surprisingly small and not statistically significant due to irrationally cautious choices by experimental governments. Encouragingly, a rules-based policy promotes a much more stable market outcome, thereby substantially reducing the risk of severe food shortages. These results underscore the importance of predictable and transparent rules for the state's involvement in agricultural markets.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4727.

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Date of creation: 01 Sep 2008
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Handle: RePEc:wbk:wbrwps:4727

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Keywords: Markets and Market Access; Food&Beverage Industry; Public Sector Corruption&Anticorruption Measures; Food Security; Access to Markets;

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References

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Citations

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Cited by:
  1. Jayne, T.S. & Chapoto, Antony & Chamberlin, Jordan, 2011. "Strengthening Staple Food Markets in Eastern And Southern Africa: Toward An Integrated Approach for CAADP Investment Plans," Food Security International Development Policy Syntheses, Michigan State University, Department of Agricultural, Food, and Resource Economics 157939, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  2. Sitko, Nicholas & Jayne, T.S., 2014. "Demystifying the Role of Grain Assemblers in the Rural Maize Markets of Eastern and Southern Africa," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 176628, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  3. Sitko, Nicholas J. & Jayne, T.S., 2014. "Exploitative Briefcase Businessmen, Parasites, and Other Myths and Legends: Assembly Traders and the Performance of Maize Markets in Eastern and Southern Africa," World Development, Elsevier, Elsevier, vol. 54(C), pages 56-67.
  4. Govereh, Jones & Jayne, Thomas S. & Chapoto, Antony, 2008. "Assessment of Alternative Maize Trade and Market Policy Interventions in Zambia," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 54492, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  5. Klaus Abbink & Lars Moller & Sarah O’Hara, 2010. "Sources of Mistrust: An Experimental Case Study of a Central Asian Water Conflict," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 45(2), pages 283-318, February.
  6. Pfuderer, Simone, 2014. "Are stockholders rational? An experimental approach to testing the competitive storage model," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France, Agricultural Economics Society 170537, Agricultural Economics Society.
  7. Abbink, Klaus & Jayne, Thomas S. & Moller, Lars C., 2007. "The Benefits of a Rules-Based Maize Marketing Policy: Results of an Experimental Study of Zambia," Food Security Collaborative Policy Briefs, Michigan State University, Department of Agricultural, Food, and Resource Economics 54636, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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