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Marketing externalities and market development

Author

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  • Emran, M. Shahe
  • Shilpi. Forhad

Abstract

The authors use survey data from Bangladesh to present empirical evidence on externalities at household level sales decisions resulting from increasing returns to marketing. The increasing returns that arise from thick market effects and fixed costs imply that a trader is able to offer higher prices to producers if the marketed surplus is higher in villages. The semi-parametric estimates identify highly nonlinear own and cross commodity externality effects in the sale of farm households. The vegetable markets in villages with low marketable surplus seem to be trapped in segmented local market equilibrium. The analysis points to the coordination failure in farm sale decisions as a plausible explanation for the lack of development of rural markets even after market liberalization policies are implemented.

Suggested Citation

  • Emran, M. Shahe & Shilpi. Forhad, 2002. "Marketing externalities and market development," Policy Research Working Paper Series 2839, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2839
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    References listed on IDEAS

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    Cited by:

    1. Brian Blankespoor & M Shahe Emran & Forhad Shilpi & Lu Xu, 2022. "Bridge to bigpush or backwash? Market integration, reallocation and productivity effects of Jamuna Bridge in Bangladesh [Agricultural technology choice and transport]," Journal of Economic Geography, Oxford University Press, vol. 22(4), pages 853-871.
    2. Blankespoor, Brian & Emran, M. Shahe & Shilpi, Forhad & Xu, Lu, 2018. "Transport Costs, Comparative Advantage, and Agricultural Development: Evidence from Jamuna Bridge in Bangladesh," MPRA Paper 86630, University Library of Munich, Germany.
    3. M. Shahe Emran & Forhad Shilpi, 2012. "The extent of the market and stages of agricultural specialization," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 1125-1153, August.
    4. Palsule-Desai, Omkar D., 2015. "Cooperatives for fruits and vegetables in emerging countries: Rationalization and impact of decentralization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 114-140.

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