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Information Provision Policies for Improving Farmer Welfare in Developing Countries: Heterogeneous Farmers and Market Selection

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  • Chen-Nan Liao

    (College of Management, National Taiwan University, Taipei 10617, Taiwan;)

  • Ying-Ju Chen

    (School of Business and Management and School of Engineering, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong;)

  • Christopher S. Tang

    (Anderson School of Management, University of California, Los Angeles, California 90024)

Abstract

We examine the impact of information provision policies on farmer welfare in developing countries where farmers lack relevant and timely information for making informed decisions regarding which crop to grow and which market to sell in. In addition to heterogeneous farmers, we consider the case when farmers are price takers and yet the price of each crop (or the price in each market) is a linearly decreasing function of the total sales quantity. When market information is offered free of charge, we show that (a) providing information is always beneficial to farmers at the individual level and (b) providing information to all farmers may not be welfare maximizing at the aggregate level. To maximize farmer welfare, it is optimal to provide information to a targeted group of farmers who are located far from either markets. However, to overcome perceived unfairness among farmers, we show that the government should provide information to all farmers at a nominal fee so that the farmers will adopt the intended optimal provision policy willingly. We extend our analysis to examine different issues including information leakage, social welfare, precision of market information, and information dissemination via a for-profit company. This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Suggested Citation

  • Chen-Nan Liao & Ying-Ju Chen & Christopher S. Tang, 2019. "Information Provision Policies for Improving Farmer Welfare in Developing Countries: Heterogeneous Farmers and Market Selection," Manufacturing & Service Operations Management, INFORMS, vol. 21(2), pages 254-270, May.
    • Handle: RePEc:inm:ormsom:v:21:y:2019:i:2:p:254-270
    DOI: 10.1287/msom.2016.0599
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    24. Nur Ayvaz‐Çavdaroğlu & Burak Kazaz & Scott Webster, 2021. "Incentivizing Farmers to Invest in Quality through Quality‐Based Payment," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3812-3830, October.

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