Asymmetric Information and Middleman Margins : An Experiment with Indian Potato Farmers
West Bengal potato farmers cannot directly access wholesale markets and do not knowwholesale prices. Local middlemen earn large margins; pass-through from wholesale to farmgate prices is negligible. When we informed farmers in randomly chosen villages about wholesale prices, average farmgate sales and prices were unaffected, but pass-through to farmgate prices increased. These results can be explained by a model where farmers bargain ex post with village middlemen, with the outside option of selling to middlemen outside the village. They are inconsistent with standard oligopolistic models of pass-through, search frictions, or risk-sharing contracts.
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| Main Authors: | , , , |
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| Format: | Journal Article biblioteca |
| Published: |
The MIT Press
2018-03
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| Subjects: | WEST BENGAL, MIDDLEMEN, FARMGATE PRICES, POTATO FARMERS, |
| Online Access: | http://hdl.handle.net/10986/29657 |
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