Domestic Trade Frictions and Agriculture
Journal of Political Economy, 2020, vol. 128, issue 7, 2690 - 2738
I develop a model of agriculture on heterogeneous land to study the relation between trade, productivity, and welfare in Peru, where farmers face high internal and external trade costs. I quantify the model with new data on crop prices, yields, and land allocations. I then measure the effects of changes to trade opportunities. A policy of paving roads raises aggregate productivity (4.9%) and the median farmer’s welfare (2.7%), but increased competition from remote suppliers harms 20% of farmers. An increase in international grain prices spreads unevenly across regions, benefiting farmers but hurting urban consumers close to ports.
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Working Paper: Domestic Trade Frictions and Agriculture (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/706859
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