Does the Invisible Hand Efficiently Guide Entry and Exit? Evidence from a Vegetable Market Experiment in India
Abhijit Banerjee,
Greg Fischer,
Dean Karlan,
Matt Lowe and
Benjamin N. Roth
No 17488, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Abstract:
What accounts for the ubiquity of small vendors operating side-by-side in the urban centersof developing countries? Why don’t competitive forces drive some vendors out of the market? We ran an experiment in Kolkata vegetable markets in which we induced (via subsidizing) some vendors to sell additional produce. The vendors earned higher profits, even when excluding the value of the subsidy. Nevertheless, after the subsidies ended vendors largely stopped selling the additional produce. Our results are consistent with collusion and inertial business practices suppressing competition and efficient market exit.
Date: 2022-07
References: Add references at CitEc
Citations:
Downloads: (external link)
https://cepr.org/publications/DP17488 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
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:cpr:ceprdp:17488
Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17488
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().