TY - JOUR
T1 - From bilateral trade to centralized markets
T2 - A search model for commodity exchanges in Africa
AU - Nyarko, Yaw
AU - Pellegrina, Heitor S.
N1 - Funding Information:
Nyarko is grateful to the International Growth Center and Anonymous donors for the research grants that enabled this research to take place.
Funding Information:
We thank the International Growth Center and Anonymous donors for the funding that made this research possible. We would like to thank Victor Arshavskiy for comments on the model. We would like to thank Karolina Wilczynska for research assistance. We also thank Chris Udry, a co-author on similar projects with the first author, as well as Ricardo Lagos, Martin Rotemberg, Sylvain Chassang, Jean-Pierre Beno?t for many very helpful conversations. We also thank participants in seminars at NYU Abu Dhabi, NEUDC, University of Ghana, the University of London SOAS and London Business School. All errors are those of the authors.
Publisher Copyright:
© 2022 Elsevier B.V.
PY - 2022/6
Y1 - 2022/6
N2 - Several African countries have recently centralized their agricultural markets by launching a commodity exchange. What will be the impact of such a move? Who will be the winners and the losers? We develop a simple search model to study the impact of introducing a commodity exchange in a village economy where traders and farmers exchange on a bilateral basis. We study the efficiency gains from moving from the status quo to a trading regime where farmers have the option of selling their produce to a commodity exchange. We describe how the gains from trade are distributed between farmers, traders and the commodity exchange itself. We show that a dual economy where high-cost farmers remain in the bilateral exchange market while low-cost ones sell to the commodity exchange can exist in equilibrium, and that forcing all farmers to sell into the commodity exchange can make some farmers worse off.
AB - Several African countries have recently centralized their agricultural markets by launching a commodity exchange. What will be the impact of such a move? Who will be the winners and the losers? We develop a simple search model to study the impact of introducing a commodity exchange in a village economy where traders and farmers exchange on a bilateral basis. We study the efficiency gains from moving from the status quo to a trading regime where farmers have the option of selling their produce to a commodity exchange. We describe how the gains from trade are distributed between farmers, traders and the commodity exchange itself. We show that a dual economy where high-cost farmers remain in the bilateral exchange market while low-cost ones sell to the commodity exchange can exist in equilibrium, and that forcing all farmers to sell into the commodity exchange can make some farmers worse off.
KW - Agriculture
KW - Bilateral exchange
KW - Walrasian markets
UR - http://www.scopus.com/inward/record.url?scp=85127817901&partnerID=8YFLogxK
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U2 - 10.1016/j.jdeveco.2022.102867
DO - 10.1016/j.jdeveco.2022.102867
M3 - Article
AN - SCOPUS:85127817901
VL - 157
JO - Journal of Development of Economics
JF - Journal of Development of Economics
SN - 0304-3878
M1 - 102867
ER -