Millers, Commission Agents and Collusion in Grain Auction Markets: Evidence from Basmati Auctions in North India

A. Banerji and J.V. Meenakshi
Additional contact information
A. Banerji: Delhi School of Economics

No 129, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: This paper undertakes structural estimation of asymmetric auction models in a market for basmati, and detects the presence of a cartel consisting of a large (in market share) local miller and commission agents purchasing for large distant millers. The contracts between the distant millers and their commission agents help to explain the specific form that collusion takes. Simulations indicate that (i) the cartel gains considerably by colluding, over the competitive outcome; (ii) however, sellers (farmers) do not lose significantly under collusion when the commission agents bid; (iii) a knowledgeable auctioneer would choose much higher starting prices for auctions when commission agents bid, compared with the observed starting prices. The paper also shows that efficient collusion, the form of collusion commonly assumed in the literature, does not explain the data well.

Keywords: Auctions; Cartels; Agricultural Markets. (search for similar items in EconPapers)
JEL-codes: L1 L4 Q13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2004-09
New Economics Papers: this item is included in nep-com and nep-cwa
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.cdedse.org/pdf/work129.pdf

Related works:
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:cde:cdewps:129

Ordering information: This working paper can be ordered from
http://www.cdedse.org/

The price is free.

Access Statistics for this paper

More papers in Working papers from Centre for Development Economics, Delhi School of Economics Delhi 110 007. Contact information at EDIRC.
Bibliographic data for series maintained by Sanjeev Sharma ().