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"You Quit?" Influence of Neighbor Experience and Exit on Small Farmer Market Participation

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  • Michelson, Hope

Abstract

This research analyzes the relationship between a farmers' participation in Nicaraguan supermarket supply chains and the market entries and exit of neighboring farmers. Drawing on insights from the technology adoption literature on learning and experimentation, we incorporate measures of neighbor experience into a model of a farmer's decision to join or quit these markets. We also test for strategic delay by small farmers and estimate the price that some farmers may pay for experimentation. Our results suggest both that that neighbors' exits negatively influence a farmer's own decision to join the supply chain and that some farmers engage in strategic delay. Early adopters bear costs of their neighbors' "free riding" in the form of higher product rejection rates and lower annual transactions with supermarkets. Evidence of strategic delay on the part of farmers suggests a social process rather than a firm-level roll out of new contracts within a given village.

Suggested Citation

  • Michelson, Hope, 2015. ""You Quit?" Influence of Neighbor Experience and Exit on Small Farmer Market Participation," MPRA Paper 62239, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:62239
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    File URL: https://mpra.ub.uni-muenchen.de/62239/1/MPRA_paper_62239.pdf
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    References listed on IDEAS

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    1. Elizabeth M. M. Q. Farina & Thomas Reardon, 2000. "Agrifood Grades and Standards in the Extended Mercosur: Their Role in the Changing Agrifood System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1170-1176.
    2. Timothy G. Conley & Christopher R. Udry, 2010. "Learning about a New Technology: Pineapple in Ghana," American Economic Review, American Economic Association, vol. 100(1), pages 35-69, March.
    3. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
    4. Michelson, Hope & Reardon, Thomas & Perez, Francisco, 2012. "Small Farmers and Big Retail: Trade-offs of Supplying Supermarkets in Nicaragua," World Development, Elsevier, vol. 40(2), pages 342-354.
    5. Sahn, David E. & Stifel, David C., 2000. "Poverty Comparisons Over Time and Across Countries in Africa," World Development, Elsevier, vol. 28(12), pages 2123-2155, December.
    6. Oriana Bandiera & Imran Rasul, 2006. "Social Networks and Technology Adoption in Northern Mozambique," Economic Journal, Royal Economic Society, vol. 116(514), pages 869-902, October.
    7. Hope C. Michelson, 2013. "Small Farmers, NGOs, and a Walmart World: Welfare Effects of Supermarkets Operating in Nicaragua," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 628-649.
    8. Jonathan Isham, 2002. "The Effect of Social Capital on Fertiliser Adoption: Evidence from Rural Tanzania," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 11(1), pages 39-60, March.
    9. Barrett, Christopher B. & Bachke, Maren E. & Bellemare, Marc F. & Michelson, Hope C. & Narayanan, Sudha & Walker, Thomas F., 2012. "Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries," World Development, Elsevier, vol. 40(4), pages 715-730.
    10. Munshi, Kaivan, 2004. "Social learning in a heterogeneous population: technology diffusion in the Indian Green Revolution," Journal of Development Economics, Elsevier, vol. 73(1), pages 185-213, February.
    11. Christine M. Moser & Christopher B. Barrett, 2006. "The complex dynamics of smallholder technology adoption: the case of SRI in Madagascar," Agricultural Economics, International Association of Agricultural Economists, vol. 35(3), pages 373-388, November.
    12. repec:oup:ajagec:v:99:y:2017:i:4:p:988-1007. is not listed on IDEAS
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    More about this item

    Keywords

    contract farming; supermarkets; market adoption; Latin America; Walmart; Nicaragua; strategic delay;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • 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

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