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Buyer Collusion and Efficiency of Government Intervention in Wheat Markets in Northern India: An Asymmetric Structural Auctions Analysis

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  • A. Banerji
  • J.V. Meenakshi

Abstract

This article uses auction theory to analyze wholesale markets for wheat in Northern India. This approach enables us to characterize the market in terms of buyer asymmetries, to detect the existence of collusion, and to quantify its impact on market prices. We show that buyer asymmetries exacerbate the downward impact of collusion on prices. The article also considers whether the government paid too much for the wheat it procured at the minimum support price, and shows that for our sample it did not. The article is based on a primary survey of two wholesale markets in North India.

Suggested Citation

  • A. Banerji & J.V. Meenakshi, 2004. "Buyer Collusion and Efficiency of Government Intervention in Wheat Markets in Northern India: An Asymmetric Structural Auctions Analysis," American Journal of Agricultural Economics, John Wiley & Sons, vol. 86(1), pages 236-253, February.
    • Handle: RePEc:wly:ajagec:v:86:y:2004:i:1:p:236-253
    DOI: 10.1111/j.1467-8276.2004.tb18469.x
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    References listed on IDEAS

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    1. Baldwin, Laura H & Marshall, Robert C & Richard, Jean-Francois, 1997. "Bidder Collusion at Forest Service Timber Sales," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 657-699, August.
    2. Storm, Servaas, 1994. "The macroeconomic impact of agricultural policy: A CGE analysis for India," Journal of Policy Modeling, Elsevier, vol. 16(1), pages 55-95, February.
    3. J.V. Meenakshi & A. Banerji, 2001. "The Unsupportable Support Price: The Government in Paddy Auctions of Northern India," Working papers 94, Centre for Development Economics, Delhi School of Economics.
    4. Bikhchandani, Sushil, 1988. "Reputation in repeated second-price auctions," Journal of Economic Theory, Elsevier, vol. 46(1), pages 97-119, October.
    5. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer.
    6. A. Banerji & J.V. Meenakshi, 2001. "Competition and Collusion in Grain Markets: Basmati Auctions in North India," Working papers 91, Centre for Development Economics, Delhi School of Economics.
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