An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia
Do rural households in developing countries make market participation and volume decisions simultaneously or sequentially? This article develops a two-stage econometric method to test between these two competing hypotheses regarding household-level marketing behavior. The first stage models the household's choice of whether to be a net buyer, autarkic, or a net seller in the market. The second stage models the quantity bought (sold) for net buyers (sellers) based on observable household characteristics. Using household data from Kenyan and Ethiopian livestock markets, we find evidence in favor of sequential decision making, the welfare implications of which we discuss. Copyright 2006, Oxford University Press.
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Volume (Year): 88 (2006)
Issue (Month): 2 ()
Pages: 324-337
| Handle: | RePEc:oup:ajagec:v:88:y:2006:i:2:p:324-337 |
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References listed on IDEAS
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- Barrett, Christopher B. & Luseno, Winnie K., 2004.
"Decomposing producer price risk: a policy analysis tool with an application to northern Kenyan livestock markets,"
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"Stochastic wealth dynamics and risk management among a poor population,"
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- Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
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- de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-417, November.
- Klein, Roger & Sherman, Robert, 1997. "Estimating new product demand from biased survey data," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 53-76.
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