Do Microenterprises Maximize Profits? A Nonrandomized Vegetable-Market Experiment in India

Abhijit Banerjee, Greg Fischer, Dean Karlan, Matt Lowe and Benjamin N. Roth

No 30360, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We ran a nonrandomized, market-level experiment in Kolkata vegetable markets in which we subsidized vendors in some markets to sell additional produce. The vendors earned over 60% higher profits, excluding the value of the subsidy. Nevertheless, after the subsidy ended many vendors stopped selling the additional produce. Vendors knew about the profitable opportunity and demonstrated that they were capable of exploiting it without assistance. We conclude that their behavior meaningfully diverges from profit maximization when considering take-home pay, likely due to a combination of high marginal costs of effort and feared sanctions from breaking anti-competitive norms.

JEL-codes: D22 (search for similar items in EconPapers)
Date: 2022-08
New Economics Papers: this item is included in nep-agr, nep-com, nep-ent and nep-exp
Note: DEV IO LS
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w30360.pdf (application/pdf)

Related works:
Working Paper: Do Microenterprises Maximize Profits? A Nonrandomized Vegetable-Market Experiment in India (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30360

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30360

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().