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 model that allows testing between these two competing hypotheses regarding household-level market 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 Kenya and Ethiopia on livestock markets, we find evidence in favor of sequential decision-making, the welfare implications of which we discuss.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: Warren Hall, Ithaca NY 14853|
Web page: http://aem.cornell.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004.
"Stochastic wealth dynamics and risk management among a poor population,"
Royal Economic Society, vol. 114(498), pages 750-777, October.
- Lybbert, Travis J. & Barrett, Christopher B. & Desta, Solomon & Coppock, D. Layne, 2002. "Stochastic Wealth Dynamics And Risk Management Among A Poor Population," Working Papers 14736, Cornell University, Department of Applied Economics and Management.
- 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.
- 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.
- Barrett, Christopher B. & Luseno, Winnie K., 2002.
"Decomposing Producer Price Risk: A Policy Analysis Tool With An Application To Northern Kenyan Livestock Markets,"
14753, Cornell University, Department of Applied Economics and Management.
- Barrett, Christopher B. & Luseno, Winnie K., 2004. "Decomposing producer price risk: a policy analysis tool with an application to northern Kenyan livestock markets," Food Policy, Elsevier, vol. 29(4), pages 393-405, August.
- 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.
When requesting a correction, please mention this item's handle: RePEc:ags:cudawp:14748. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.