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On trade efficiency in the Ethiopian agricultural markets

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  • Quattri, Maria A.

Abstract

The availability of enabling institutions, information systems and infrastructure is a precondition to enhance agricultural markets’ efficiency, and make market actors less vulnerable to price instability. This paper investigates whether the focus on institutional and technological upgrading is enough to make Ethiopian agricultural markets more efficient. In particular, given that a requirement for exchange efficiency is the lack of unexploited mutually beneficial spatial arbitrage opportunities, we look for evidence of increasing returns to transaction size and returns to scale in transport using detailed trader surveys collected in 2001 and 2007. Whilst transport costs could be reduced by assembling loads and avoiding trans-shipments for the transporters, we find no evidence that transport and handling costs are a source of increasing returns to transaction size. Hence, the presence of many small market intermediaries is not a source of inefficiency in Ethiopia, and concentration in market intermediation is not necessary for social efficiency.

Suggested Citation

  • Quattri, Maria A., 2012. "On trade efficiency in the Ethiopian agricultural markets," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122512, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa123:122512
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    References listed on IDEAS

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    1. Chamberlin, Jordan & Pender, John & Yu, Bingxin, 2006. "Development domains for Ethiopia: capturing the geographical context of smallholder development options," DSGD discussion papers 43, International Food Policy Research Institute (IFPRI).
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    3. Kindie Getnet & Wim Verbeke & Jacques Viaene, 2005. "Modeling spatial price transmission in the grain markets of Ethiopia with an application of ARDL approach to white teff," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 491-502, November.
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    5. Bob Baulch, 1997. "Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 477-487.
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    More about this item

    Keywords

    Ethiopia; market efficiency; International Development; Risk and Uncertainty; O13; Q13;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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