Asymmetric Information and Middleman Margins: An Experiment with Indian Potato Farmers

Dilip Mookherjee, Maximo Torero, Sandip Mitra and Sujata Visaria
Authors registered in the RePEc Author Service: Sujata Visaria and Sujata Visaria

No 11548, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In the Indian state of West Bengal, potato farmers sell to local middlemen be- cause they lack direct access to wholesale markets. High-frequency marketing surveys reveal large middleman margins and negligible pass-through from wholesale to farm- gate prices. Farmers are uninformed about downstream wholesale and retail prices. To test alternative models of farmer-middlemen trades, we conduct a fi eld experi- ment where farmers in randomly chosen villages are provided with wholesale price information. Information had negligible average e ffects on farmgate sales and rev- enues, but increased pass-through from wholesale to farmgate prices. These results are consistent with a model of ex post bargaining between farmers and village mid- dlemen where farmers also have the option of selling to other middlemen outside the village. They are inconsistent with models of risk-sharing contracts between middle- men and farmers, standard oligopolistic models of pass-through or search frictions.

Keywords: Middlemen; Pass-through; Price information; Cellphones; Supply chains (search for similar items in EconPapers)
JEL-codes: L14 O12 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-agr, nep-cta and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Asymmetric Information and Middleman Margins: An Experiment with Indian Potato Farmers (2018)
Working Paper: Asymmetric Information and Middleman Margins: An Experiment with Indian Potato Farmers (2015)
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