Market Institutions, Transaction Costs, and Social Capital in the Ethiopian Grain Market
International Food Policy Research Institute, 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.
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Determinants of the Placement and Outreach
Structure Conduct and Performance
Household Participation in Financial Markets
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Addis Ababa agricultural agroforestry aman analysis average Bangladesh Bank Birr borrowing BRAC brokerage brokers bush/fallow cocoa coefficient consumption credit limit crop cultivation Development Dhaka Dire Dawa distribution dummy equation erosion estimated expenditure farm farmers females fixed effects flood exposure Food Policy food security foodgrain forest forestland gender Ghana grain Grameen Bank group-based hectare household head Household Survey 1998 IFPRI impact important income increase individual inheritance La Lima land rights land tenure institutions loans maize males matrilineal Mean SD MFIs microfinance opportunity cost ownership paddy participation percent percentage population production profit programs purchase Quintile RDRS Region regression relatively Research revenue rice rubber rural sample scenario search intensity search labor season sector sellers significant Simulated social capital soil Source Sumatra Table thanas tion tons traders transaction costs transfers trees variables village wheat