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Monopsony and Time–Consistency: Sustainable Pricing Policies for Perennial Crops

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  • Timothy Besley

Abstract

Since farmers in developing countries must make sunk investments to produce perennial crops, governments, in the guise of state‐run marketing boards, face constraints on maximal sustinable price which can be charged by a marketing board assuming that “punishments” involve reversion to subsistence by untrusting farmers. This maximal price balances concerns about revenue extraction against the incentive of governments to cheat by capitalizing on sunk investments.

Suggested Citation

  • Timothy Besley, 1997. "Monopsony and Time–Consistency: Sustainable Pricing Policies for Perennial Crops," Review of Development Economics, Wiley Blackwell, vol. 1(1), pages 57-70, February.
    • Handle: RePEc:bla:rdevec:v:1:y:1997:i:1:p:57-70
    DOI: 10.1111/1467-9361.00005
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    Cited by:

    1. Schiff, Maurice, 1994. "Commodity exports and the adding up problem in developing countries : trade, investment, and lending policy," Policy Research Working Paper Series 1338, The World Bank.
    2. Jean Paul Azam & Robert Bates & Bruno Biais, 2009. "Political Predation And Economic Development," Economics and Politics, Wiley Blackwell, vol. 21(2), pages 255-277, July.
    3. Margaret McMillan, 1998. "A Dynamic Theory of Primary Export Taxation: Evidence From Sub-Saharan Africa," Discussion Papers Series, Department of Economics, Tufts University 9812, Department of Economics, Tufts University.
    4. Goodlet Owusu Ansah & Isaac Antwi & Lawrencia Pokuah Siaw, 2017. "All because of competition: A bane or blessing for smaller licence buying companies (LBCs) of the Ghanaian cocoa industry," Cogent Business & Management, Taylor & Francis Journals, vol. 4(1), pages 1299603-129, January.
    5. Kala Krishna, 1998. "The adding up problem: a targeting approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(2), pages 151-173.
    6. John McLaren, 2003. "Institutional Elements of Tax Design and Reform," World Bank Publications - Books, The World Bank Group, number 15170, December.
    7. Margaret S. McMillan, 1999. "Foreign Direct Investment: Leader or Follower?," Discussion Papers Series, Department of Economics, Tufts University 9901, Department of Economics, Tufts University.
    8. Vigneri, Marcella & Santos, Paulo, 2008. "What does liberalization without price competition achieve?: The case of cocoa in Ghana," GSSP working papers 14, International Food Policy Research Institute (IFPRI).
    9. Kolavalli, Shashidhara & Vigneri, Marcella & Maamah, Haruna & Poku, John, 2012. "The partially liberalized cocoa sector in Ghana: Producer price determination, quality control, and service provision," IFPRI discussion papers 1213, International Food Policy Research Institute (IFPRI).
    10. Margaret S. McMillan & William A. Masters, 2000. "Africa's Growth Trap: A Political-Economy Model of Taxation, R&D and Investment," CID Working Papers 50A, Center for International Development at Harvard University.
    11. Willian A Masters and Margaret S McMillan, 2000. "Africa’s growth trap: a political-economy model of taxation, R&D and investment," Economics Series Working Papers WPS/2000-14, University of Oxford, Department of Economics.

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