Mobile Phones and Mozambique Traders: What is the Size of Reduced Search Costs and Who Benefits?

Tinbergen Institute Discussion Paper 2019-047/V

59 Pages Posted: 15 Jul 2019

See all articles by Wouter Zant

Wouter Zant

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

Date Written: July 13, 2019

Abstract

We investigate to what extent the roll-out of the mobile phone network in Mozambique reduced transport costs and search costs, and thereby decreased spatial price dispersion and improved market efficiency. Estimations are based on data of transport costs of maize grain and maize market prices. The mobile phone rollout explains a 10%-13% reduction in maize price dispersion. Around half of this reduction is associated with search costs related to transport, the other half with other search costs, for example for the collection of maize in source markets. Search costs are substantial and also a substantial component of total transport costs. Benefits of increased market efficiency are biased towards consumer markets. Results are robust for non-random rollout of the mobile phone network and several other threats.

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

JEL Classification: Q13, O13, O33, Q11

Suggested Citation

Zant, Wouter, Mobile Phones and Mozambique Traders: What is the Size of Reduced Search Costs and Who Benefits? (July 13, 2019). Tinbergen Institute Discussion Paper 2019-047/V, Available at SSRN: https://ssrn.com/abstract=3419410 or http://dx.doi.org/10.2139/ssrn.3419410

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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