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Effects of violent political conflict on the supply, demand and fragmentation of fresh food markets

Ziv Bar-Nahum, Israel Finkelshtain, Rico Ihle () and Ofir D. Rubin
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Ziv Bar-Nahum: Hebrew University of Jerusalem
Israel Finkelshtain: Hebrew University of Jerusalem
Rico Ihle: Wageningen University
Ofir D. Rubin: Ben-Gurion University of the Negev

Authors registered in the RePEc Author Service: Ziv Bar Nahum

Food Security: The Science, Sociology and Economics of Food Production and Access to Food, 2020, vol. 12, issue 3, No 4, 503-515

Abstract: Abstract Violent political conflict has been documented to have comprehensive adverse effects on economic activity and, thus, substantially harm social welfare. As conflict escalations are often reported to fragment economic space, we suggest an empirical framework which allows for estimating changes in the size of markets often split by frontlines. This approach uses a differentiated goods oligopoly model to separate effects of conflict intensity on consumer demand, costs of trade, market size, and market structure. We combine daily sales of apples in Hebron - one of the focal points of the Israeli–Palestinian conflict - and variables quantifying complementary aspects of conflict intensity. Conflict is found to suppress demand and affect competition more significantly than it increases costs of trading. Simulations indicate a 15% reduction in total daily consumption during conflict of high intensity while a pacification would yield a 20% welfare gain. This empirical framework allows disentangling the effects of conflict on food markets. The results suggest that relief policies should consider alleviating effects of fragmentation of economic space, e.g., by ensuring humanitarian corridors.

Keywords: Changes in market size; Conflict; Differentiated goods; Economic space; Food demand; Fresh food marketing; Israeli-Palestinian conflict; MENA; Palestine; D74; L11; L13; L66; Q11 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s12571-020-01025-y

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