Reliability of an Information Source and Its Moderating Role on the Outcome of Mobile Phones: The Case of Agricultural Prices

Abstract

In the developing rural and urban communities, mobile phones are observed to have a high adoption rate. Despite the unparalleled adoption of mobile phones, however, the microeconomic outcome of mobile phones on agricultural markets is found to be mixed. In theory, the observed variability in outcome can be explained by reliability, power, and incentive related moderators. In this paper, we focus on the moderating role of reliability of information and we investigate the impact of mobile phones on the choice of a primary source of information for prices. Data is collected from 190 rural families. A probit, an IV regression, and a control function models are used and a new mathematical model is developed. In our study site, mobile phone-owning farmers are observed to be less dependent on an external source as the main source of price information, unless they have access to what they presume is a reliable external source of price information. This is why policymakers need to focus on generating a reliable source of price information, which includes the development of an efficient price discovery system, before they can focus on the issue of cheap access to information technology, like mobile phones.

Keywords: mobile phone, reliability, power, incentive, network effect, price discovery, commercialization

JEL Classification: D2, D83, Q1, O3