Market Institutions, Transaction Costs, and Social Capital in the Ethiopian Grain Market

Front Cover
Intl Food Policy Res Inst, Jan 1, 2001 - Business & Economics - 93 pages
This report addresses the overarching question regarding the role of institutions in enhancing market development following market reforms. It uses the New Institutional Economics framework to empirically analyze the role of a specific market institution, that of brokers acting as intermediaries to match traders in the Ethiopian grain market in reducing the transaction costs of search faced by traders. Brokers play a key role in facilitating exchange in a weak marketing environment where limited public market information, the lack of grain standardization, oral contracts, and weak legal enforcement of contracts increase the risk of contract failure. Relying on primary data, it analyzes traders' microeconomic behavior, social capital, the nature and extent of their transaction costs, and the norms and rules governing the relationship between brokers and traders.The study uses an innovative approach to quantify the costs of search and demonstrates that the brokerage institution is economically efficient both for individual traders and for global economic welfare.

What people are saying - Write a review

We haven't found any reviews in the usual places.

Common terms and phrases

Popular passages

Page 67 - Significant at the 10 percent level. ** Significant at the 5 percent level. *** Significant at the 1 percent level.
Page 1 - In fact, the costs of transacting are the key to the performance of economies. There have always been gains from trade, as classical international trade theory has taught, but so too have there been obstacles to realizing these gains. If transport costs were the only obstacle, then we would observe through history an inverse relationship between transport costs, on the one hand, and trade and exchange and the well-being...
Page 93 - M.,eds., 1989, 1969, pp. 83-97. Zellner, Arnold. Risk and the Economy: A Finance Perspective: Commentary. In Stone, CC, ed.. 1989, pp. 118-24. Zusman, Pinhas. Peasants' Risk Aversion and the Choice of Marketing Intermediaries and Contracts: A Bargaining Theory of Equilibrium Marketing Contracts. In Bardhan, P., Úd.
Page 90 - Grain Marketing Regulations: Impact on Peasant Production in Ethiopia', Food Policy, 14 (4).

Bibliographic information