Distance to Market and Search Costs in an African Maize Market
Farm-gate buying by small itinerant buyers is the dominant mode of primary marketing in Tanzania's maize market. This paper estimates the effect of household distance to market on maize farm-gate prices, and the extent to which seasonally dete...
| Main Author: | |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/08/16611055/distance-market-search-costs-african-maize-market http://hdl.handle.net/10986/12016 |
| Summary: | Farm-gate buying by small itinerant
buyers is the dominant mode of primary marketing in
Tanzania's maize market. This paper estimates the
effect of household distance to market on maize farm-gate
prices, and the extent to which seasonally determined search
costs can explain price variations between the lean and the
harvest seasons using data from the most recent Tanzania
Household Budget Survey (2007). The author observes that
greater distance to market depresses farm-gate prices but
that it is a relatively modest effect, and that this effect
is pro-cyclical in that it is stronger during the harvest
season when prices are lowest. The paper discusses the
latter result with reference to search costs as an
explanatory factor. It also briefly places the findings in
the context of Tanzania's food security patterns,
making a link between food insecurity and high search costs.
The main policy conclusion is that coordinating mechanisms
such as village market places (in parallel with farm-gate
buying) may reduce transaction costs in rural markets. |
|---|