Making Markets: Experiments in Agricultural Input Market Formation

47 Pages Posted: 27 Aug 2024

Date Written: August 15, 2024

Abstract

Making markets is central to theories of development. In a randomized controlled trial, we vary an agricultural input market's organization to test whether time-inconsistent preferences, hard or soft commitments, and liquidity are constraints to market formation. The results show that markets organized earlier raise market sales consistent with farmer's measured time-inconsistent preferences. Liquidity in later spot markets are a substitute for earlier market timing. Farmer's demand is relatively inelastic to deposit levels in forward contracts. The experiment also directly tests the separability hypothesis where we find creating input markets alone does not lead to welfare improvements.

Keywords: agriculture, market formation, welfare improvements, randomized controlled trial, development, farmers

Suggested Citation

Dillon, Andrew and Tomaselli, Nicoló, Making Markets: Experiments in Agricultural Input Market Formation (August 15, 2024). Buffett Institute Global Poverty Research Lab Working Paper (forthcoming), Available at SSRN: https://ssrn.com/abstract=4934116 or http://dx.doi.org/10.2139/ssrn.4934116

Andrew Dillon (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Nicoló Tomaselli

University of Florence - Department of Economics and Management ( email )

Via delle Pandette, 9
Firenze, Florence 50127
Italy

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