The relevance of a rules-based maize marketing policy: an experimental case study of Zambia

Klaus Abbink, Thomas Jayne and Lars Moller

No 4727, Policy Research Working Paper Series from The World Bank

Abstract: Strategic interaction between public and private actors is increasingly recognized as an important determinant of agricultural market performance in Africa and elsewhere. Trust and consultation tend to positively affect private activity while uncertainty of government behavior impedes it. This paper reports on a laboratory experiment based on a stylized model of the Zambian maize market. The experiment facilitates a comparison between discretionary interventionism and a rules-based policy in which the government pre-commits itself to a future course of action. A simple precommitment rule can, in theory, overcome the prevailing strategic dilemma by encouraging private sector participation. Although this result is also borne out in the economic experiment, the improvement in private sector activity is surprisingly small and not statistically significant due to irrationally cautious choices by experimental governments. Encouragingly, a rules-based policy promotes a much more stable market outcome, thereby substantially reducing the risk of severe food shortages. These results underscore the importance of predictable and transparent rules for the state's involvement in agricultural markets.

Keywords: Markets and Market Access; Food&Beverage Industry; Public Sector Corruption&Anticorruption Measures; Food Security; Access to Markets (search for similar items in EconPapers)
Date: 2008-09-01
New Economics Papers: this item is included in nep-afr, nep-agr, nep-dev and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: The Relevance of a Rules-based Maize Marketing Policy: An Experimental Case Study of Zambia (2011)
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