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Can risk averse competitive input providers serve farmers efficiently in developing countries ?


  • Makdissi, Paul
  • Wodon, Quentin


Under price ceilings and quality floors for agricultural inputs in cash crop sectors in developing countries where credit markets are weak, imperfect information on the ability of farmers to pay for their inputs at the end of the cropping season may lead the decentralized production of those inputs by risk averse private input providers to be inefficient. A coordinating agency and/or subsidies for new farmers could help to produce and distribute more agricultural inputs, thereby increasing the profits for input providers while also enabling more farmers to produce the crops that are key to their livelihood.

Suggested Citation

  • Makdissi, Paul & Wodon, Quentin, 2009. "Can risk averse competitive input providers serve farmers efficiently in developing countries ?," Policy Research Working Paper Series 4922, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4922

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    References listed on IDEAS

    1. Miller, Robert A, 1984. "Job Matching and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1086-1120, December.
    2. Louis M. Goreux & Paul R Masson & Dhaneshwar Ghura & Ousmane Badiane, 2002. "Cotton Sector Strategies in West and Central Africa," IMF Working Papers 02/173, International Monetary Fund.
    3. McCall, Brian P., 1991. "A dynamic model of occupational choice," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 387-408, April.
    4. Poulton, Colin & Gibbon, Peter & Hanyani-Mlambo, Benjamine & Kydd, Jonathan & Maro, Wilbald & Larsen, Marianne Nylandsted & Osorio, Afonso & Tschirley, David & Zulu, Ballard, 2004. "Competition and Coordination in Liberalized African Cotton Market Systems," World Development, Elsevier, vol. 32(3), pages 519-536, March.
    5. Stephen R. Boucher & Michael R. Carter & Catherine Guirkinger, 2008. "Risk Rationing and Wealth Effects in Credit Markets: Theory and Implications for Agricultural Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 409-423.
    6. Akiyama, Takamasa & Baffes, John & Larson, Donald F. & Varangis, Panos, 2003. "Commodity market reform in Africa: some recent experience," Economic Systems, Elsevier, vol. 27(1), pages 83-115, March.
    7. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    8. Paul Makdissi & Cyril Téjédo, 2004. "Un effet externe positif à l'embauche. L'amélioration de la connaissance de la qualité des travailleurs," Revue économique, Presses de Sciences-Po, vol. 55(1), pages 93-102.
    9. Wodon, Quentin & Velez, Eduardo, 2001. "Poverty and Inequality," MPRA Paper 12307, University Library of Munich, Germany.
    10. Makdissi Paul & Wodon Quentin, 2005. "The Impact on Farmers of Privatizing Parastatal Agricultural Monopsonies," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(2), pages 1-11, September.
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    More about this item


    Rural Poverty Reduction; Economic Theory&Research; Crops&Crop Management Systems; Access to Finance; Rural Development Knowledge&Information Systems;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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