Rural Roads and Intermediated Trade: Regression Discontinuity Evidence from Sierra Leone
50 Pages Posted: 15 Oct 2012 Last revised: 14 Aug 2013
Date Written: August 13, 2013
Using a road-level regression discontinuity design in Sierra Leone, we study the impacts of improvements in rural road infrastructure on crop prices in rural markets. We show that the improved roads reduced market prices of local crops. These price effects are stronger in markets that are further from major urban centers and in less productive areas. In addition, these price effects are reversed in areas with better cell phone penetration. We show that our empirical findings are consistent with a search cost framework a la Mortensen, but inconsistent with other models, such as Bertrand competition, bilateral bargaining, Cournot oligopsony.
Keywords: Rural Roads, Intermediated Trade, Sub-Saharan Africa
JEL Classification: O13, F15
Suggested Citation: Suggested Citation