Using Individual-Level Randomized Treatment to Learn about Market Structure

Lorenzo Casaburi and Tristan Reed

American Economic Journal: Applied Economics, 2022, vol. 14, issue 4, 58-90

Abstract: Interference across competing firms in RCTs can be informative about market structure. An experiment that subsidizes a random subset of traders who buy cocoa from farmers in Sierra Leone illustrates this idea. Interpreting treatment-control differences in prices and quantities purchased from farmers through a model of Cournot competition reveals differentiation between traders is low. Combining this result with quasi-experimental variation in world prices shows that the number of traders competing is 50 percent higher than the number operating in a village. Own-price and cross-price supply elasticities are high. Farmers face a competitive market in this first stage of the value chain.

JEL-codes: L13 L14 O13 Q12 Q13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (8)

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DOI: 10.1257/app.20200306

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