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Rural Infrastructure, Transactions Costs, And Marketed Surplus In Kenya

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  • Renkow, Mitch
  • Hallstrom, Daniel G.
  • Karanja, Daniel David

Abstract

We develop a conceptual framework for quantifying fixed transactions costs facing semisubsistence households. Using household survey data from a sample of 324 Kenyan maize farmers, we generate estimates of household supply and demand schedules, as well as the price bands that they face. Our econometric results indicate that on average the ad valorem tax equivalent of the fixed transactions costs facing the households in our sample is 28%. Additional analysis indicates that both remoteness and infrastructure quality have significant impacts on the size of the transactions costs facing farm households. To the best of our knowledge, ours are the first empirical estimates of the magnitude of transactions costs.

Suggested Citation

  • Renkow, Mitch & Hallstrom, Daniel G. & Karanja, Daniel David, 2001. "Rural Infrastructure, Transactions Costs, And Marketed Surplus In Kenya," 2001 Annual meeting, August 5-8, Chicago, IL 20668, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea01:20668
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    References listed on IDEAS

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    1. Haggblade, Steven & Hazell, Peter & Brown, James, 1989. "Farm-nonfarm linkages in rural sub-Saharan Africa," World Development, Elsevier, vol. 17(8), pages 1173-1201, August.
    2. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    3. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
    4. 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 1400-1417, November.
    5. Fan, Shenggen & Hazell, P. B. R., 1999. "Are returns to public investment lower in less-favored rural areas?: an empirical analysis of India," EPTD discussion papers 43, International Food Policy Research Institute (IFPRI).
    6. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 893-920, October.
    7. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
    8. Christopher Udry, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 495-526.
    9. Naylor, Rosamond L. & Falcon, Walter P., 1995. "Is the locus of poverty changing?," Food Policy, Elsevier, vol. 20(6), pages 501-518, December.
    10. Pinstrup-Andersen, Per & Pandya-Lorch, Rajul, 1994. "Alleviating poverty, intensifying agriculture, and effectively managing natural resources.:," 2020 vision discussion papers 1, International Food Policy Research Institute (IFPRI).
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    Marketing;

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