Unpacking Side‐Selling: Experimental Evidence From Rural Mexico

With the rise of market‐led development, marketing cooperatives have emerged that offer smallholder producers a guaranteed minimum price for their cash crops. Their existence is threatened when members side‐sell a part of their harvest to outside buyers. We conduct a framed field experiment with indigenous coffee producers in southern Mexico to examine the effect of four factors on the marketing decision: additional income, the presence of microcredit and/or technical assistance, average outside buyer price, and harvest quantity. Our results show that participants allocate on average 82% of their harvest to the certain‐price buyer. Changes in harvest quantity and outside‐buyer price have minimal effects. The offer of complementary services has a null effect. Moreover, 22% of the participants always allocate their entire harvest to the certain‐price buyer. Extra income increases this probability by 10%. Subgroup analysis reveals that this effect is limited to existing cooperative members.