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Asymmetric Information and Food Safety: Maize in Kenya

Author

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  • Hoffmann, Vivian
  • Mutiga, Samuel
  • Harvey, Jagger
  • Nelson, Rebecca
  • Milgroom, Michael

Abstract

When quality is not observable by prospective buyers, theory predicts that the quality of marketed goods will suffer, and the volume of trade will be depressed. Using data from more than 2,000 maize samples collected in four Kenyan provinces, we show that the presence of aflatoxin, an invisible and dangerous fungal contaminant, is not reflected in maize prices but does affect how maize is used. This apparent market failure reduces the quality of maize available on the market. In addition, we show that self-produced maize is a normal good.

Suggested Citation

  • Hoffmann, Vivian & Mutiga, Samuel & Harvey, Jagger & Nelson, Rebecca & Milgroom, Michael, 2013. "Asymmetric Information and Food Safety: Maize in Kenya," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151288, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:151288
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    File URL: http://purl.umn.edu/151288
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    References listed on IDEAS

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    1. Sultan, Arif, 2008. "Lemons hypothesis reconsidered: An empirical analysis," Economics Letters, Elsevier, vol. 99(3), pages 541-544, June.
    2. Bond, Eric W, 1982. "A Direct Test of the "Lemons" Model: The Market for Used Pickup Trucks," American Economic Review, American Economic Association, vol. 72(4), pages 836-840, September.
    3. Genesove, David, 1993. "Adverse Selection in the Wholesale Used Car Market," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 644-665, August.
    4. Winand Emons & George Sheldon, 2009. "The market for used cars: new evidence of the lemons phenomenon," Applied Economics, Taylor & Francis Journals, vol. 41(22), pages 2867-2885.
    5. Jonathan B. Pritchett & Richard M. Chamberlain, 1993. "Selection in the Market for Slaves: New Orleans, 1830–1860," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 461-473.
    6. Kirimi, Lilian & Sitko, Nicholas & Jayne, Thom S. & Karin, Francis & Muyanga, Milu & Sheahan, Megan & Flock, James & Bor, Gilbert, 2011. "A Farm Gate-to-Consumer Value Chain Analysis of Kenya's Maize Marketing System," Working Papers 202597, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    7. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    8. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-498, June.
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    Cited by:

    1. Ma, Xingliang & Spielman, David J. & Nazli, Hina & Zambrano, Patricia & Zaidi, Fatima & Kouser, Shahzad, 2014. "Information efficiency in a lemons market: Evidence from Bt cotton seed market in Pakistan," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 175278, Agricultural and Applied Economics Association.
    2. Kadjo, Didier & Ricker-Gilbert, Jacob & Alexander, Corinne, 2015. "Does quality affect maize prices in sub-Saharan Africa? Evidence from Benin," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205503, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

    More about this item

    Keywords

    Crop Production/Industries; Food Consumption/Nutrition/Food Safety; O12; O13; O15;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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