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Farm‐gate tomato price negotiations under asymmetric information

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  • Moti Jaleta
  • Cornelis Gardebroek

Abstract

This article provides an empirical analysis of farm‐gate tomato price negotiations under asymmetric information. Regression models are estimated to analyze when and by how much sellers stick to their initial ask prices and what explains the variation in the initial ask–offer price spread. Detailed information on 66 farm‐gate tomato transactions and daily tomato wholesale price data from the central vegetable market in Addis Ababa are used for the analysis. Estimation results show that farmers are less committed to their initial ask price when the buyer speaks out the transaction price first, when their quality perceptions of the tomatoes being transacted differ from those of the buyers, and when their tomato farm is at a large distance from the main road. Sellers stick more to their initial ask price when they know that the central market price is high. The initial ask–offer price spread decreases when the buyer speaks out the initial negotiation price first, but increases in the difference in quality perception between buyer and seller, and in the quantity of tomatoes being transacted.

Suggested Citation

  • Moti Jaleta & Cornelis Gardebroek, 2007. "Farm‐gate tomato price negotiations under asymmetric information," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 245-251, March.
    • Handle: RePEc:bla:agecon:v:36:y:2007:i:2:p:245-251
    DOI: 10.1111/j.1574-0862.2007.00202.x
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    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Cited by:

    1. Alphonse Singbo & Alfons Oude Lansink & Grigorios Emvalomatis, 2014. "Estimating farmers’ productive and marketing inefficiency: an application to vegetable producers in Benin," Journal of Productivity Analysis, Springer, vol. 42(2), pages 157-169, October.
    2. Labonne, Julien & Chase, Robert S., 2009. "The power of information : the impact of mobile phones on farmers'welfare in the Philippines," Policy Research Working Paper Series 4996, The World Bank.
    3. Ryoji Hiraguchi & Keiichiro Kobayashi, 2015. "Choice of market in the monetary economy," CIGS Working Paper Series 15-002E, The Canon Institute for Global Studies.
    4. Blend Frangu & Jennie Sheerin Popp & Michael Thomsen & Arben Musliu, 2018. "Evaluating Greenhouse Tomato and Pepper Input Efficiency Use in Kosovo," Sustainability, MDPI, vol. 10(8), pages 1-14, August.

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