ASYMMETRIC INFORMATION AND MIDDLEMAN MARGINS: AN EXPERIMENT WITH WEST BENGAL POTATO FARMERS

IFPRI will continue with its AMD (Applied Microeconomics and Development) Seminar Series on Thursday, May 16 at 12:00pm EST. Dilip Mookherjee of Boston University will present on how asymmetric information impacts middleman margins, farm-gate prices, and overall trade.

Mookherjee will discuss results from the paper Asymmetric Information and Middleman Margins: An Experiment with West Bengal Potato Farmers. This paper examines results from a field experiment conducted in West Bengal. In this experiment, farmers in randomly chosen villages were provided with daily price information regarding prices in neighboring wholesale markets where traders re-sell the farmers’ potatoes. The paper finds that the provision of information did not impact middleman margins, but did have an effect on both farm-gate prices and the quantities of potatoes traded. This finding suggests that the lack of direct access to outside markets depresses farmers’ ability to bargain with traders and prevents information-based interventions from benefiting farmers.  

The AMD Seminar Series is designed to provide a forum for researchers to present high-quality applied microeconomics and development work. Seminars are held on the first and third Thursday of each month at the IFPRI home office in Washington DC. To RSVP for this or future seminars, please contact Sarah Dalane (s.dalane@cgiar.org) or Alexandria Cannon (a.cannon@cgiar.org).