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The role of intermediaries in enhancing market efficiency in the Ethiopian grain market

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  • Gabre-Madhin, Eleni Z.

Abstract

This paper investigates the impact of the institution of brokerage on the optimal search behaviour and the welfare gains and losses of traders in the Ethiopian grain market. Without brokers, the privately optimal search diverges from the socially optimal search due to the positive spill-over of individual search behaviour. Numerical analysis using the actual distribution of search costs and search efficiency obtained from primary data collected in Ethiopia reveals that this externality is partially internalised by the presence of brokers and that total welfare increases significantly due to a more efficient allocation of search effort.© 2001 Elsevier Science B.V. All rights reserved.

Suggested Citation

  • Gabre-Madhin, Eleni Z., 2001. "The role of intermediaries in enhancing market efficiency in the Ethiopian grain market," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 25(2-3), September.
  • Handle: RePEc:ags:iaaeaj:177191
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    File URL: http://purl.umn.edu/177191
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    References listed on IDEAS

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    4. Beynon, Jonathan & Jones, Stephen & Yao, Shujie, 1992. "Market reform and private trade in Eastern and Southern Africa," Food Policy, Elsevier, vol. 17(6), pages 399-408, December.
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    6. Yavas, Abdullah, 1994. "Middlemen in Bilateral Search Markets," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 406-429, July.
    7. Yavas, Abdullah, 1992. "Marketmakers versus matchmakers," Journal of Financial Intermediation, Elsevier, vol. 2(1), pages 33-58, March.
    8. Jayne, T. S. & Jones, Stephen, 1997. "Food marketing and pricing policy in Eastern and Southern Africa: A survey," World Development, Elsevier, vol. 25(9), pages 1505-1527, September.
    9. Fafchamps, Marcel, 1996. "The enforcement of commercial contracts in Ghana," World Development, Elsevier, vol. 24(3), pages 427-448, March.
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    Citations

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    Cited by:

    1. Lemeilleur, Sylvaine & Codron, Jean-Marie, 2011. "Marketing cooperative vs. commission agent: The Turkish dilemma on the modern fresh fruit and vegetable market," Food Policy, Elsevier, vol. 36(2), pages 272-279, April.
    2. Gabre-Madhin, Eleni Z. & Haggblade, Steven, 2003. "Successes in African agriculture," MSSD discussion papers 53, International Food Policy Research Institute (IFPRI).
    3. Fafchamps, Marcel & Gabre-Madhin, Eleni & Minten, Bart, 2005. "Increasing returns and market efficiency in agricultural trade," Journal of Development Economics, Elsevier, vol. 78(2), pages 406-442, December.
    4. Mezgebo, Taddese, 2014. "Beyond Extended Phenotype Evolution of extended identity in order to reconcile study of humanity with biological evolution," MPRA Paper 54392, University Library of Munich, Germany.
    5. Haji, Jema, 2008. "Economic efficiency and marketing performance of vegetable production in the eastern and central parts of Ethiopia," Department of Economics publications 1730, Swedish University of Agricultural Sciences, Department of Economics.
    6. De Fraja, Gianni & Sákovics, József, 2012. "Exclusive nightclubs and lonely hearts columns: Non-monotone participation in optional intermediation," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 618-632.
    7. Hu, Lifang & Zeng, Yinchu & Lopez, Rigoberto A., 2016. "Access to Credit by Traders in Chinese Agricultural Wholesale Markets," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235449, Agricultural and Applied Economics Association.
    8. Mezgebo, Taddese & Dereje, Fikadu, 2010. "Structure, conduct and performance of grain trading in Tigray and its impact on demand for commodity exchange: The case Maychew, Mokone, Alemata, Mekelle and Himora," MPRA Paper 24901, University Library of Munich, Germany.
    9. Renkow, Mitch & Slade, Roger, 2013. "An assessment of IFPRI's work in Ethiopia 1995-2010: Ideology, influence, and idiosyncrasy," Impact assessments 36, International Food Policy Research Institute (IFPRI).
    10. Lifang Hu & Lopez, Rigoberto A. & Yinchu Zeng, 2016. "The Impact of Credit Constraints on the Performance of Chinese Agricultural Wholesalers," Working Papers 43, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    11. Mujawamariya, Gaudiose & Burger, Kees & D'Haese, Marijke F.C., 2012. "Behaviour and performance of traders in the gum arabic supply chain in Senegal: Investigating oligopsonistic myths," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126236, International Association of Agricultural Economists.

    More about this item

    Keywords

    Institutions; Intermediaries; Brokers; Search; Ethiopia; Grain market; Welfare; Crop Production/Industries; Production Economics; D83; D40; D23;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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