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Making Markets: Experiments in Agricultural Input Market Formation

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  • Andrew Dillon
  • Nicoló Tomaselli

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.

Suggested Citation

  • Andrew Dillon & Nicoló Tomaselli, 2024. "Making Markets: Experiments in Agricultural Input Market Formation," Working Papers - Economics wp2024_18.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2024_18.rdf
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    More about this item

    Keywords

    agriculture; market formation; welfare improvements; randomized controlled trial; development; farmers.;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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