Competition in Kenyan Markets and Its Impact on Income and Poverty : A Case Study on Sugar and Maize

This paper investigates the link between competitive, well-functioning food markets and consumer welfare. The paper explores two key food markets in Kenya -- sugar and maize -- and argues that a variety of factors conspire to distort market prices upward. Distortionary factors include import tariff policy, nontariff barriers, potential anticompetitive conduct by firms, and direct state intervention in markets. Changes in sugar and maize prices are shown to have significant welfare effects on consumers. Equivalent income effects are estimated using the most recent available representative household survey data -- the Kenya Integrated Household Budget Survey 2005/06. The paper shows that relaxing trade barriers to allow sugar prices to fall by 20 percent could reduce poverty by 1.5 percent. Similarly, adjusting government interventions in the maize market, which have been shown to inflate maize prices by 20 percent on average, could reduce poverty by 1.8 percent. The magnitude of the estimated income effects may vary based on updated household-level consumption data, assumptions regarding demand elasticities, and estimates of import parity prices for these staples. However, in all the scenarios, more competitive prices have a larger average effect on the poorest households in urban and rural areas, supporting the relevance of effective competition policies for poverty reduction strategies.

Bibliographic Details

Main Authors:	Argent, Jonathan, Begazo, Tania
Format:	Publications & Research biblioteca
Language:	English en_US
Published:	World Bank Group, Washington, DC 2015-01
Subjects:	AGRICULTURE, AVERAGE ANNUAL HOUSEHOLD CONSUMPTION, AVERAGE PRICES, BARRIERS TO COMPETITION, BARS, BEET SUGAR, BENCHMARK, BENCHMARKS, BORDER PRICE, CANE SUGAR, CARTEL, CEREALS, CHANGES IN PRICES, CLIMATE, COCOA, COLLUSION, COMMODITY, COMMODITY MARKETS, COMMON MARKET, COMPETITION POLICIES, COMPETITION POLICY, COMPETITIVE MARKET, COMPETITIVE MARKETS, COMPETITIVE PRICES, COMPETITIVENESS, CONSUMERS, CONSUMPTION INCREASES, CONSUMPTION LEVELS, CONSUMPTION PATTERNS, CROSS PRICE, DEVELOPMENT POLICY, DISPOSABLE INCOME, DOMESTIC MARKET, DOMESTIC PRICES, DOMESTIC PRODUCTION, ECONOMIES OF SCALE, ELASTICITY, ELASTICITY OF SUBSTITUTION, EXCESS DEMAND, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, EXPORTS, FAIR, FINANCIAL CRISIS, FINISHED PRODUCT, FINISHED PRODUCTS, FIXED COSTS, FIXED RATE, FLOUR, FOOD MARKETS, FOOD PRICES, FOREIGN COMPETITION, FREE TRADE, FUTURES, GOVERNMENT INTERVENTION, GOVERNMENT INTERVENTIONS, GOVERNMENT INVOLVEMENT, GOVERNMENT OWNERSHIP, GROWTH POTENTIAL, HOUSEHOLD BEHAVIOR, IMPORT QUOTAS, IMPORTS, INCOME, INCOME DISTRIBUTION, INCOME EFFECT, INCOME EFFECTS, INCOME GROUPS, INCOME HOUSEHOLDS, INCOME LEVELS, INCOMES, INFLATION, INTERNATIONAL COMPETITION, INTERNATIONAL MARKET, INVESTMENT CLIMATE, LIBERALIZATION, LOWER INCOME HOUSEHOLDS, LOWER PRICES, MAIZE, MARKET ENTRY, MARKET PRICES, MARKET SHARE, MARKET STRUCTURE, MEAL, MILLS, MONETARY FUND, MONOPOLIES, MONOPOLY, PACKAGING, PER CAPITA CONSUMPTION, PORRIDGE, PREFERENTIAL ACCESS, PREMIUM PRICE, PRICE CHANGE, PRICE CHANGES, PRICE COMPETITION, PRICE DECREASE, PRICE DECREASES, PRICE ELASTICITY, PRICE ELASTICITY OF DEMAND, PRICE FIXING, PRICE FLUCTUATIONS, PRICE INCREASE, PRICE INCREASES, PRICE SERIES, PRICE SETTING, PRICE VARIATION, PRICING PRACTICES, PRIVATIZATION, PRODUCTIVITY INCREASES, PURCHASING, REAL INCOME, REGIONAL TRADE, REGULATOR, RETAIL, RETAIL MARKET, RETAIL PRICE, RETAIL PRICES, SALE, SALES, SCENARIOS, STOCKS, SUBSTITUTE, SUBSTITUTION, SUCROSE, SUGAR, SUGAR CANE, SUGAR FACTORIES, SUGAR INDUSTRY, SUPPLIERS, SUPPLY SIDE, TARIFF BARRIERS, TAX, TOTAL CONSUMPTION, TRADE BARRIERS, TRADE POLICIES, TRADE POLICY, UNCERTAINTIES, VALUE ADDED, VITAMINS, VOLATILITY, WELFARE ANALYSIS, WHEAT, WHOLESALE MARKET, WHOLESALE PRICES, WHOLESALERS, WORLD MARKET, WORST-CASE,
Online Access:	http://documents.worldbank.org/curated/en/2015/01/23884246/competition-kenyan-markets-impact-income-poverty-case-study-sugar-maize http://hdl.handle.net/10986/21395
Tags:	Add Tag No Tags, Be the first to tag this record!