Do Consumers Benefit from Supply Chain Intermediaries? Evidence from a Policy Experiment in Edible Oils Market in Bangladesh

M. Shahe Emran, Dilip Mookherjee, Forhad Shilpi and M. Helal Uddin
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M. Helal Uddin: University of Dhaka

No dp-273, Boston University - Department of Economics - The Institute for Economic Development Working Papers Series from Boston University - Department of Economics

Abstract: In March 2011, Delivery Order traders (DOTs) in the edible oils market in Bangladesh were banned. The reform provides a natural experiment to test alternative models of marketing intermediaries. We develop three models and derive testable predictions about the intercept of the margin equation and pass-through of international price. A difference-in-difference analysis shows that the reform led to higher marketing margins and lower pass-through. The evidence rejects models based on pure double-marginalization-of-rents, and provision of low cost credit by DOTs, but supports a model where DOTs relax binding credit constraints faced by wholesale traders.

Keywords: Marketing Intermediary; Trader Margin; Commodity Prices; Market Power; Double Marginalization; Supplier Credit; Credit Rationing; International Prices; Passthrough; Policy Experiment; Edible Oils; Bangladesh (search for similar items in EconPapers)
JEL-codes: L13 O12 Q13 (search for similar items in EconPapers)
Pages: 40
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (2)

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Working Paper: Do consumers benefit from supply chain intermediaries ? evidence from a policy experiment in the edible oils market in Bangladesh (2016)
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