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Do Consumers Benefit from Supply Chain Intermediaries? Evidence from a Policy Experiment in Edible Oils Market in Bangladesh

Author

Listed:
  • M. Shahe Emran

    (IPD, Columbia University)

  • Dilip Mookherjee

    (Boston University)

  • Forhad Shilpi

    (DECRG, World Bank)

  • M. Helal Uddin

    (University of Dhaka)

Abstract

In March 2011, Delivery Order traders (DOTs) in the edible oils market in Bangladesh were banned. The reform provides a natural experiment to test alternative models of marketing intermediaries. We develop three models and derive testable predictions about the intercept of the margin equation and pass-through of international price. A difference-in-difference analysis shows that the reform led to higher marketing margins and lower pass-through. The evidence rejects models based on pure double-marginalization-of-rents, and provision of low cost credit by DOTs, but supports a model where DOTs relax binding credit constraints faced by wholesale traders.

Suggested Citation

  • M. Shahe Emran & Dilip Mookherjee & Forhad Shilpi & M. Helal Uddin, "undated". "Do Consumers Benefit from Supply Chain Intermediaries? Evidence from a Policy Experiment in Edible Oils Market in Bangladesh," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-273, Boston University - Department of Economics.
    • Handle: RePEc:bos:iedwpr:dp-273
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    Cited by:

    1. Casaburi, Lorenzo & Reed, Tristan, 2017. "Competition in Agricultural Markets: An Experimental Approach," CEPR Discussion Papers 11985, C.E.P.R. Discussion Papers.
    2. Kamil Czwartkowski & Arkadiusz Wierzbic & Wojciech Golimowski, 2022. "Quality, Key Production Factors, and Consumption Volume of Niche Edible Oils Marketed in the European Union," Sustainability, MDPI, vol. 14(3), pages 1-17, February.

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    More about this item

    Keywords

    Marketing Intermediary; Trader Margin; Commodity Prices; Market Power; Double Marginalization; Supplier Credit; Credit Rationing; International Prices; Passthrough; Policy Experiment; Edible Oils; Bangladesh;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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