Mobile Phones and Mozambique Farmers: Less Asymmetric Information and More Trader Competition?

Tinbergen Institute Discussion Paper 2018-055/V

63 Pages Posted: 5 Jul 2018 Last revised: 28 Oct 2019

See all articles by Wouter Zant

Wouter Zant

Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: October 27, 2019

Abstract

We investigate the impact of search costs of farmers and traders on prices, by measuring to what extent the introduction of mobile phones in Mozambique has affected maize producer prices, retail market prices and margins. Estimations are based on weekly recorded producer and retail market prices of white maize grain, from July 1997 to December 2009, for 15 major producer markets in Mozambique. We find a margin increase varying from 6.4% to 11.5%, and a drop in producer prices of 8.1% to 14.0%, supporting a bias of benefits towards traders. Hence, not less asymmetric information and more trader competition, but rather the reverse: traders benefit more from exploiting mobile phone opportunities. Estimation results are robust to non-random roll-out of the mobile phone network and various other threats. Margin impacts correlate significantly with terminal market prices. Household survey data yield an impact on farm-gate prices that is consistent with the key result of this study. Several farmer characteristics reveal a weak but plausible correlation with the drop in farm-gate prices.

Keywords: search costs, transport costs, mobile phones, agricultural markets, maize prices, Mozambique, sub-Sahara Africa

JEL Classification: O13, O33, Q11, Q13

Suggested Citation

Zant, Wouter, Mobile Phones and Mozambique Farmers: Less Asymmetric Information and More Trader Competition? (October 27, 2019). Tinbergen Institute Discussion Paper 2018-055/V, Available at SSRN: https://ssrn.com/abstract=3197258 or http://dx.doi.org/10.2139/ssrn.3197258

Wouter Zant (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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