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.

Bibliographic Details

Main Authors:	Mitra, Sandip, Mookherjee, Dilip, Torero, Maximo, Visaria, Sujata
Format:	Journal Article biblioteca
Published:	The MIT Press 2018-03
Subjects:	WEST BENGAL, MIDDLEMEN, FARMGATE PRICES, POTATO FARMERS,
Online Access:	http://hdl.handle.net/10986/29657
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