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

Sandip Mitra (), Dilip Mookherjee, Maximo Torero and Sujata Visaria ()
Additional contact information
Sandip Mitra: Sampling and Ocial Statistics Unit, Indian Statistical Institute
Sujata Visaria: Department of Economics, Hong Kong University of Science and Technology
Authors registered in the RePEc Author Service: Sujata Visaria and Sujata Visaria

No 2015-29, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

Abstract: In the Indian state of West Bengal, potato farmers sell to local middlemen because they lack direct access to wholesale markets. In high-frequency farmer marketing surveys we find that farmers are poorly informed about wholesale and retail prices, and there is a large gap between wholesale and farmgate prices. To test alternative models of farmer-middlemen trades, we conduct a field experiment providing farmers in randomly chosen villages with market price information. Information provision had negligible average effects on farmgate sales and revenues, but increased pass-through from wholesale to farmgate prices. The results are inconsistent with models of risk-sharing via contracts between middlemen and farmers. They are consistent with a model of ex post bargaining and sequential price competition between a cartel of village middlemen and a cartel of external middlemen.

Keywords: agricultural finance; agent based lending; group lending; selection; repayment (search for similar items in EconPapers)
JEL-codes: L14 O12 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2015-08, Revised 2015-08
New Economics Papers: this item is included in nep-agr, nep-com, nep-cta and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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http://iems.ust.hk/assets/publications/working-papers-2015/iemswp2015-29.pdf First version, 2015 (application/pdf)

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 (2016)
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