Transaction costs, information technologies, and the choice of marketplace amongst farmers in northern Ghana

Relatively little evidence is available on the importance of information and the role of Information Communication Technologies (mobiles and radios) in the key aspects of marketing behaviours of developing country farmers. We included the concept of proportional and fixed transactions costs within a household framework to investigate market participation decisions of farm households with a marketable surplus of food crops. Differently to previous studies, we also modelled the behaviour of farm gale buyers. We use a novel dataset from Ghanaian farmers, which contains detailed information fro individual selling transaction that is seldom available in other household surveys. We found that larger transactions occur at the farmgale, where farmgale buyers are prepared to pay a premium price because of lower fixed transaction costs they incur. The knowledge of market information has a contrasting effect on the decision of the marketplace. In some cases, farmers use the information on prices in specific marketplaces to travel farther, in other cases they sell their commodity in closer market where they may strenghening their bargaining power. Finally we only found weak evidence on the impact of using mobile phones in reducing searching costs and attract farm gate buyers.