The Relevance of a Rules-Based Maize Marketing Policy : An Experimental Case Study of Zambia
Strategic interaction between public and private actors is increasingly recognized as an important determinant of agricultural market performance in Africa and elsewhere. Trust and consultation tend to positively affect private activity while uncer...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/09/9882913/relevance-rules-based-maize-marketing-policy-experimental-case-study-zambia http://hdl.handle.net/10986/6948 |
| Summary: | Strategic interaction between public and
private actors is increasingly recognized as an important
determinant of agricultural market performance in Africa and
elsewhere. Trust and consultation tend to positively affect
private activity while uncertainty of government behavior
impedes it. This paper reports on a laboratory experiment
based on a stylized model of the Zambian maize market. The
experiment facilitates a comparison between discretionary
interventionism and a rules-based policy in which the
government pre-commits itself to a future course of action.
A simple precommitment rule can, in theory, overcome the
prevailing strategic dilemma by encouraging private sector
participation. Although this result is also borne out in the
economic experiment, the improvement in private sector
activity is surprisingly small and not statistically
significant due to irrationally cautious choices by
experimental governments. Encouragingly, a rules-based
policy promotes a much more stable market outcome, thereby
substantially reducing the risk of severe food shortages.
These results underscore the importance of predictable and
transparent rules for the state's involvement in
agricultural markets. |
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