Are agricultural markets location-optimal? A case study of Gaya District (Bihar)

The thesis of efficiency and optimality of Indian agricultural system has several facets that have called for attention of a number of scholars. Some have proved allocative optimality of resource utilization, the others have proved optimality of distribution of gains from agriculture, while still others have come up with the cases of marketing optimality. However, there is hardly any work that studies location optimality of market centers in any region of India. In this paper we examine if the empirically observed market locations are optimal and as a case study take up the agricultural markets located in Gaya district of Bihar. We have used the location-allocation model for optimality analysis. Our findings reveal that existing locations and arrivals of merchandise at the agricultural markets of Gaya are very close to what might have been if they had been located on the principle of optimality. There are minor deviations, of course. However, as the existing markets have developed in an open region, unlike our cost-optimal locations searched out in a closed region, a discount must be made in favour of the existing locations, and we do not have enough reasons and evidence to conclude that the existing markets are sub-optimally located. We conclude, therefore, that market forces automatically establish location optimality and assert that the existing agricultural markets in Gaya district are location-optimal.