Mobile money, transaction costs, and market participation: evidence from Côte d’Ivoire and Tanzania

Becatien H. Yao, Aleksan Shanoyan, Benjamin Schwab and Vincent Amanor-Boadu

Food Policy, 2022, vol. 112, issue C

Abstract: High transaction costs impede smallholder market participation, yet the effectiveness of past solutions to reduce transaction costs has been limited. The growing adoption of digital payments provides new perspectives to tackle market access challenges. This paper develops and tests a conceptual model grounded in transaction costs economics theory, in which mobile money improves market participation by lowering the cost of completing a transaction in a distant market. The model shows that mobile money can even be used to alleviate pricing risks due to hold-up costs. Using data from Côte d’Ivoire and Tanzania, we find that mobile money commercial users are 37 percentage points more likely to participate in distant markets than non-users. The findings highlight the need for careful consideration of potential synergies between the policies aimed at facilitating mobile money use and efforts directed at enhancing market participation, as well as potential negative effects from taxation policies targeting digital markets in developing economies.

Keywords: Mobile money; Market participation; Transaction costs; Hold-up; Digital payment (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfpoli:v:112:y:2022:i:c:s0306919222001397

DOI: 10.1016/j.foodpol.2022.102370

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