nep-agr New Economics Papers
on Agricultural Economics
Issue of 2018‒01‒01
twenty-two papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. The impact of EU trade preferences on the extensive and intensive margins of agricultural and food products By Margherita Scoppola; Valentina Raimondi; Alessandro Olper
  2. Agricultural Trade and Food Security By Will Martin
  3. Factor Endowments and Farm Structure : Algerian Settler Agriculture During the First Globalization (1870-1914) By Maravall Buckwalter, Laura
  4. Evaluation of the relevance of border protection for agriculture in Switzerland By Dorothee Flaig; Frank van Tongeren; Emily Gray; Lucie Adenäuer
  5. Effect of subsidies on technical efficiency excluding or including environmental outputs: An illustration with a sample of farms in the European Union By Laure Latruffe; K Hervé Dakpo; Yann Desjeux; Giffona Justinia Hanitravelo
  6. Do public works programs crowd-out pro-environmental behavior? Empirical evidence from food-for-work programs in Ethiopia By Goytom Abraha Kahsay; Workineh Asmare Kassie; Abebe Damte Beyene; Lars Gårn Hansen
  7. Temperature shocks, growth and poverty thresholds: evidence from rural Tanzania By Marco Letta; Pierluigi Montalbano; Richard S.J. Tol
  8. Productivity, efficiency and technical change in world agriculture: a färe-primont index approach By Néstor A. Le Clech; Carmen Fillat Castejón
  9. Time preferences of food producers between fishermen and farmers: Do "cultivate and grow" matter? By Yayan Hernuryadin; Koji Kotani; Tatsuyoshi Saijo
  10. The impact of organic farming on endangered birds and butterflies: applying an ecological-economic model By Gerling, Charlotte; Sturm, Astrid; Wätzold, Frank
  11. Neocolonialism or Balanced Partnership? Reframing Agricultural Relations Between the EU and Africa By Lungu, Ioana
  12. A New Year, a New You ?Heterogeneity and Self-control in Food Purchases By Laurens Cherchye; Bram De Rock; Rachel Griffith; Martin O'Connell; Kate Smith; Frederic Vermeulen
  13. Regulating transgenic soybean production in Argentina By Pascale Phelinas; Sonia Schwartz
  14. Are Preferences for Food Quality Attributes Really Normally Distributed? An Analysis Using Flexible Mixing Distributions By Vincenzina Caputo; Riccardo Scarpa; Rodlofo M. Nayga; David L. Ortega
  15. Land Use Change and Policy in Iowa’s Loess Hills By Arora, Gaurav; Wolter, Peter T.; Hennessy, David A.; Feng, Hongli
  16. "Climate Roots of Loss Aversion" By Oded Galor; Viacheslav Savitskiy
  17. Does the expansion of biofuels encroach on the forest? By Derya Keles; Johanna Choumert; Pascale Combes; Eric Kere
  18. Decision Theory Application in Agricultural Entrepreneurship Promotion By Natalia Dobryagina
  19. How expensive should CO2 be? Fuel for the debate on optimal climate policy By Steven Poelhekke
  20. Does the Design of Spot Markets Matter for the Success of Futures Markets? Evidence from Dairy Futures By Jędrzej Białkowski; Jan Koeman
  21. What's in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names By Bouamra-Mechemache, Zohra; Yu, Jianyu; Zago, Angelo
  22. The impact of infrastructure shocks on agricultural markets: Evidence from the Zambezi river in Mozambique By César Salazar; Sam Jones

  1. By: Margherita Scoppola (University of Macerata); Valentina Raimondi (University of Milan); Alessandro Olper (University of Milan)
    Abstract: In this paper we study the trade creation effects of EU preferential trade agreements (PTAs) in the agriculture and food sectors for a large sample of developing countries in the period 1990-2006. We investigate the extent to which the PTAs affect trade through the extensive\textemdash number of exported products - or the intensive margin - volume of existing products. We use a gravity framework in a panel data setting, and different estimators to deal with the issues of zero trade flows and with the presence of an upper bound in the dependent variable. The results show that EU PTAs positively affect the extensive margin in agricultural trade, but not in processed foods. As regards the intensive margin, the effect is driven by the role of tariffs alone, while the other provisions of PTAs do not exert any other significant impact on agricultural or food products.
    Keywords: Gravity equation,EU trade preferences,Developing countries,Extensive/intensive margins
    JEL: F13 Q17 F14
    Date: 2017–12
  2. By: Will Martin
    Abstract: The second United Nations Sustainable Development Goal (SDG2) includes the goal to: “End hunger and achieve food security and improved nutrition” by 2030. While such an ambitious goal will clearly involve a wide range of policies and actors, this policy brief focuses on the role of trade policies in affecting food and nutrition security. Extensive and frequently contentious, debate swirls about whether trade in agricultural products is beneficial or detrimental for food security, particularly in developing countries (Diaz-Bonilla 2015). Food self-sufficiency proponents argue that global trade in food products can hurt smaller and poor producers in developing countries by exposing them to increased price volatility and competition (Edelman et al. 2014). For those on the pro-trade side, trade in food products is an important channel for improving consumers’ access to food, and agricultural exports are an importance source of income for many small farmers worldwide. This brief first examines the relationship between trade and food security. It then turns to how specific agricultural trade policies can impact food security and hunger.
    Date: 2017–12
  3. By: Maravall Buckwalter, Laura
    Abstract: The adaptation of crops, agricultural techniques, and farm size to the new environments ushered in by colonialism help identify the sources of long-term development. This paper is a simplified approach to this adaptation process. It analyzes the relative factor endowments (land and labor) based on the timing of settlement to study the regional differences in the adoption of improved agricultural techniques in Constantine at the beginning of the 1900s. During the colonial years, the Algerian farming system diverged into large estates reliant on indigenous wage labor and sharecropping. As fertile land became increasingly scarce, the ability to participate in the grain export market depended on the capability of engaging in new and non-labor saving agricultural techniques. The results demonstrate that innovation in cash-crop production depended on the abundance of indigenous labor but also required a significant capital investment to offset the worse land quality. Thus, access constraints to agricultural advancement help explain the Algerian origins of colonial land inequality and the failure of colonial institutions to create a small-peasant settler economy.
    Keywords: North Africa; Land Use; Land Ownership and Tenure; Adaptation; Technological Change; Economic Development; Agriculture
    JEL: Q16 Q15 O1 N5
    Date: 2017–11–23
  4. By: Dorothee Flaig; Frank van Tongeren; Emily Gray; Lucie Adenäuer
    Abstract: Switzerland’s overarching agricultural policy objectives reflect societal concerns about various production aspects of agriculture, such as environmental sustainability and animal welfare, and the expectation that agriculture will provide public goods demanded by society. Among the various policy instruments used by Switzerland to achieve these objectives, border protection represents a significant component of support. This study assesses the relevance of border protection for agriculture in Switzerland. It finds that border protection is not relevant for achieving the overarching objectives of Swiss agricultural policy, with one exception. By stimulating domestic production, high levels of border protection ensure that Switzerland meets its target rate of gross food production. But border protection is unlikely to deliver the other outcomes and public goods desired by Swiss society. This is because support provided through border protection is not conditional on delivery of the outcomes and public goods demanded by Swiss society, and is untargeted towards the activities, inputs and regions most strongly related to those outcomes and public goods. Moreover, border protection imposes significant costs on the Swiss economy. The study concludes by proposing alternative policies in place of border protection.
    Keywords: Border protection, METRO, multifunctionality, public goods, Switzerland
    JEL: Q15 Q17 Q18
    Date: 2017–12–19
  5. By: Laure Latruffe; K Hervé Dakpo; Yann Desjeux; Giffona Justinia Hanitravelo
    Abstract: With a sample of farms in the European Union (EU) and Farm Accountancy Data Network (FADN) data completed by additional data, we illustrate how the effect of farm subsidies on technical efficiency changes when environmental (good or bad) outputs are incorporated in the calculation of technical efficiency. Results indicate that the effect of the Common Agricultural Policy (CAP) operational subsidies on farm technical efficiency changes when environmental outputs (in this study: greenhouse gas emissions, nitrogen balance and ecological focus areas) are taken into account in the efficiency calculation: some effects change significance, and more importantly, some effects change sign.
    Keywords: technical efficiency, subsidies, Common Agricultural Policy, environmental outputs, farms, European Union
    JEL: Q12 Q18 C6
    Date: 2017
  6. By: Goytom Abraha Kahsay (Department of Food and Resource Economics, University of Copenhagen); Workineh Asmare Kassie (School of Economics, University of Gondar); Abebe Damte Beyene (Environment and Climate Research Center (ECRC), Ethiopian Development Research Institute (EDRI)); Lars Gårn Hansen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: The Ethiopian food for work program typically induces forest conservation work. While economic outcomes have been studied before, little is known about the program’s environmental impact. We run a choice experiment among Ethiopian farmers eliciting preferences in a hypothetical afforestation program that mimics the Ethiopian food-for-work program. We find that introducing food incentives decreases willingness to participate in the program and participation rate increases with an increase in the proportion of individuals selected for food incentive. We also find that the crowding-out effect is stronger when food incentive recipients are selected based on income compared to lottery-based selection. Our data points to pro-social signaling as the most likely channel for the crowding-out effect. These results suggest that (1) food-for-work programs could have unintended negative environmental effects and (2) directions for design reform that could mitigate this.
    Keywords: Crowding-out; Food-for-work program, Pro-environmental behavior; Selection; Pro-social signaling
    JEL: D03 D64 D82 Q57
    Date: 2017–12
  7. By: Marco Letta (Department of Economics and Social Sciences, Sapienza University of Rome (IT).); Pierluigi Montalbano (Department of Economics and Social Sciences, Sapienza University of Rome (IT).); Richard S.J. Tol (Department of Economics, University of Sussex (UK))
    Abstract: Using the LSMS-ISA Tanzania National Panel Survey by the World Bank, we study the relationship between rural household consumption growth and temperature shocks over the period 2008 – 2013. Temperature shocks have a negative and significant impact on household growth only if their initial consumption lies below a critical threshold. As such, temperature shocks slow income convergence among households. Agricultural yields and labour productivity are the main transmission channels. These findings support the Schelling Conjecture: economic development would allow poor farming households to cope with climate change, and closing the yield gap and modernizing agriculture is crucial for adaptation to the negative impacts of global warming.
    Keywords: weather shocks; climate change; household consumption growth; rural development.
    JEL: I32 O12 Q12 Q54
    Date: 2017–11
  8. By: Néstor A. Le Clech (Quilmes National University); Carmen Fillat Castejón (University of Zaragoza)
    Abstract: This paper makes a comparative analysis of the total factor productivity (TFP) estimations on the agricultural sector between the traditional Malmquist index and the new Färe-Primont index (FPI) proposed by O´Donnell. Moreover, the study makes some direct comparisons with previous traditional literature. In addition, it makes use of an improved measure of the capital stock, which showed important effects on the estimates of the agricultural productivity. The new FPI yields some lower growth of agricultural productivity and the use of the improved measure of the capital stock shows a very important effect on TFP gains.
    Keywords: Total Factor Productivity; Färe-Primont index; Malmquist index; agricultural productivity; technological and efficiency change
    JEL: C18 O47 Q11
    Date: 2017–09
  9. By: Yayan Hernuryadin (School of Economics and Management, Kochi University of Technology); Koji Kotani (School of Economics and Management, Kochi University of Technology); Tatsuyoshi Saijo (Research Institute for Humanity and Nature)
    Abstract: Resource scarcity and food security are two important issues due to overexploitation of natural resources with increasing population, market demand and mass production, whereas fishermen and farmers have been two main occupations that produce food, utilizing natural resources. The production mode between fishermen and farmers is distinct in that fishermen (farmers) harvest (cultivate, grow and harvest), leading to different daily life style and culture. It is hypothesized that such differences in daily practices and production mode between fishermen and farmers characterize their time preferences or discounting behaviors. We have conducted a discounting elicitation experiment for fishermen and farmers in Indonesia. The statistical analysis shows that the average (median) discount factors of farmers are 0.48 (0.50), respectively, whereas those of fishermen are 0.30 (0.10). The betafit and median regressions demonstrate that the discount factors of farmers are 9.8% and 26.8% higher than those of fishermen, respectively, implying that fishermen are much more shortsighted than farmers. This result appears to reflect that farmers wait or "cultivate and grow" six months for their harvest because of which they save some portion of their income, while fishermen catch or "harvest" fish every day and typically use up their daily income. Although same policies have been uniformly implemented on these two occupations, the government may need some devices and education on fishermen to nurture a culture of "cultivate and grow" fish stock for promoting long-term conservation behaviors as well as sustaining fishery and their lives.
    Keywords: time preferences, field experiments, food security, resource sustainability, fishermen
    Date: 2017–12
  10. By: Gerling, Charlotte; Sturm, Astrid; Wätzold, Frank
    Abstract: The conservation of biodiversity is one of the aims of the EU’s organic farming subsidy programme. We applied an ecological-economic modelling procedure to analyse the impact of organically and conventionally managed meadows on endangered bird and butterfly species in Saxony, Germany. We also analysed the impact of agri-environment schemes (AES) in landscapes with conventional and organic farming. Applying a modelling procedure to assess the impact of organic farming is novel as previous research predominantly relies on field studies. We found that for the species considered the difference in the impact of conventional and organic farming is minor, and both types of farming are unable to conserve a large share of these species. This is because the species require different timings of land use for their reproduction and neither conventional nor organic farming provide this heterogeneity. We also found that in comparison with conventional farmers organic farmers face different opportunity costs when implementing AES measures and are offered different payments for such measures. This influences organic farmers’ decisions to take part in AES, which in turn has an important impact on biodiversity conservation. In order to better conserve species it may be necessary to adapt the payment structure of AES with respect to organic farming.
    Keywords: organic farming; grassland; agri-environment schemes; biodiversity; model; DSS-Ecopay
    JEL: Q1 Q5
    Date: 2017–12–13
  11. By: Lungu, Ioana
    Abstract: The narratives in the media with respect to EU external policies and their effects on developing countries generally paint a picture of unequal power dynamics and negative externalities, particularly with respect to international trade and land grabbing. In this paper, I use trade data to argue that reality is more nuanced and aim to provide a preliminary sketch of the institutional dynamics between the EU and Africa. I focus on agricultural relationships to highlight the interplay between historical path dependencies, colonialism, trade policy and domestic institutions on the EU and African side. While trade is often portrayed in an overly simplified manner as the main factor hindering agricultural development, African countries are often plagued by a long history of extractive institutions, both politically and economically, which lead to a vicious cycle of unequally distributed resources, exploitation, insecure human rights and a lack of incentives for innovation. This becomes apparent when examining phenomena such as land-grabbing, which often involve African elites partnering with foreign investors to conclude controversial deals. Overall, this paper aims to highlight the necessity of building institutional capacity particularly in countries with a long history of extractive institutional continuity, and to underline the importance of state centralisation for agricultural development, so that African partners can fully take advantage of the preferential trade regime with the EU and improve their position with respect to power dynamics.
    Keywords: development; institutional economics; international trade; Economic Partnership Agreement; European Union; Africa; agricultural development;
    JEL: F19 H8 O1 O13 O2 O20 O24 Q17 Q18
    Date: 2017–12
  12. By: Laurens Cherchye; Bram De Rock; Rachel Griffith; Martin O'Connell; Kate Smith; Frederic Vermeulen
    Abstract: We document considerable within-person (over time) variation in diet quality that is not fully explained by responses to fluctuations in the economic environment. We propose a two-selves model that provides a structural interpretation to this variation, in which food choices are a compromise between a healthy and an unhealthy self, each with well-behaved preferences. We show that the data are consistent with this model using revealed preference methods. The extent of self-control problems is higher among younger and lower income consumers, though this is overstated if we do not control for responses to fluctuations in the economic environment. Our results are intuitively related to stated attitudes on self-control.
    Keywords: two-selves model; self-control; revealed preferences
    JEL: C14 D12 D90 I12
    Date: 2017–12
  13. By: Pascale Phelinas (CESSMA UMRD 245 - Centre d'études en sciences sociales sur les mondes africains, américains et asiatiques - IRD - Institut de Recherche pour le Développement - Inalco - Institut National des Langues et Civilisations Orientales - UPD7 - Université Paris Diderot - Paris 7); Sonia Schwartz (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article investigates how to regulate transgenic soybean production in Argentina. Taking into account the broad range of negative externalities associated with transgenic soybean production, we explore the effects of two different policy instruments, namely a subsidy for non-transgenic soybean and production quotas for transgenic soybean. Taking into account the political and economic context in Argentina, we demonstrate that auctioned production quotas are the best way to achieve the regulation of transgenic soybean production. However, the organization of the agricultural sector in Argentina is such that "raising rivals’ costs" behavior could occur on the quota market although the output price is set exogenously. We show that auctioned quotas limit this anti-competitive behavior. Finally, we demonstrate that introducing a shadow cost of public funds leads to an increase in the optimal production level of transgenic soybean.
    Keywords: Production quotas, Environmental regulation, Glyphosate,Transgenic soybean, Argentina, Market power.
    Date: 2017–12–06
  14. By: Vincenzina Caputo (Michigan State University); Riccardo Scarpa (University of Waikato); Rodlofo M. Nayga (University of Arkansas); David L. Ortega (Michigan State University)
    Abstract: We empirically question the commonly employed distributional assumption of normality of taste distribution in mixed logit models with continuous random parameters. We use a WTP-space random utility discrete choice model with flexible distributions (Train 2016) on data from two choice experiments regarding beef with nested set of quality attributes. We specifically address distributional features such as asymmetry, multi-modality and range of variation, and find little support for normality. Our results are robust to attribute dimensionality in experimental design. Implications of our results for practitioners in the field are discussed.
    Keywords: flexible taste distributions; mixed logit; logit mixed logit; food preferences; preference heterogneity
    Date: 2017–11–30
  15. By: Arora, Gaurav; Wolter, Peter T.; Hennessy, David A.; Feng, Hongli
    Abstract: Land use changes have important implications on ecosystems and society. Detailed identification of the nature of land use changes in any local region is critical for policy design. In this paper, we quantify land use change in Iowa’s Loess Hills ecoregion, which contains much of the state’s remaining prairie grasslands. We employ two distinct panel datasets, the National Resource Inventory data and multi-year Cropland Data Layers, that allow us to characterize spatially-explicit land use change in the region over the period 1982-2010. We analyze land use trends, land use transitions and crop rotations within the ecoregion, and contrast these with county and state-level changes. To better comprehend the underlying land use changes, we evaluate our land use characterizing metrics conditional on soil quality variables such as slope and erodibility. We also consider the role of contemporary agricultural policy and commodity markets to seek explanations for land use changes during the period of our study. Although crop production has expanded on the Loess Hills landform since 2005, much of the expansion in corn acres has been from reduced soybean acreage. We find that out of the total 258 km2 increase in corn acreage during 2005-’10, about 100 km2 transitioned from soybeans. Data also indicate intensifying monoculture with higher percentage of corn plantings for two to four consecutive years during 2000-’10. In addition, crop production is found to have moved away from more heavily sloped land. Cropping does not appear to have increased on lands with higher crop productivity.
    Date: 2016–01–01
  16. By: Oded Galor; Viacheslav Savitskiy
    Abstract: This research explores the origins of loss aversion and the variation in its prevalence across regions, nations and ethnic group. It advances the hypothesis and establishes empirically that the evolution of loss aversion in the course of human history can be traced to the adaptation of individuals to the asymmetric eects of climatic shocks on reproductive success during the Malthusian epoch. Exploiting variations in the degree of loss aversion among second generation migrants in Europe and the US, as well as across precolonial ethnic groups, the research establishes that consistent with the predictions of the theory, individuals and ethnic groups that are originated in regions in which climatic conditions tended to be spatially correlated, and thus shocks were aggregate in nature, are characterized by greater intensity of loss aversion, while descendants of regions marked by climatic volatility have greater propensity towards loss-neutrality.
    Date: 2018
  17. By: Derya Keles (LEF - Laboratoire d'Economie Forestière - INRA - Institut National de la Recherche Agronomique - AgroParisTech); Johanna Choumert; Pascale Combes (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Eric Kere (Banque Africaine de Développement)
    Date: 2017–11–30
  18. By: Natalia Dobryagina (Department of Social Sciences and Economics - Sapienza University of Rome (Italy))
    Abstract: This study investigates opportunities of decision theory application in agricultural entreprenership promotion, it considers behavioral characteristics of entrepreneurs in the sphere of agriculture, identifies the common biases in potential entrepreneurs’ decision making process and suggests a number of decision theory approaches (including NUDGE instruments), applicable in debiasing entrepreneurial decisions as well as in motivating entrepreneurship in agriculture. The paper demonstrates the issue of limited attention to the differences between hereditary and non-hereditary entrepreneurs decision making process in agricultural policies. In order to investigate the effect of non-pecuniary instrument on potential entrepreneurs’ behaviour, a model of a policy effect on entrepreneurial decision was created and a new classification of entrepreneurial decision criteria was developed. The experiment was conducted in the University of Barcelona with 253 participants and has proven that the suggested non-pecuniary instrument of agricultural entrepreneurship promotion has significant positive effect on the attractiveness of the agricultural sphere of entrepreneurship. Experiment results has also demonstrated that non-pecuniary factors play greater role in decision making process of individuals, who are more attracted by the agricultural sphere of entrepreneurship.
    Keywords: Non-hereditary Entrepreneurship, Policy, Decision Theory, Agriculture, Bias.
    JEL: Q18 D91 L26
    Date: 2017–11
  19. By: Steven Poelhekke
    Abstract: Most people are convinced that climate change is a threat and that it should somehow be dealt with. It is also clear that CO2 emissions are still too cheap and must be priced higher to sufficiently curtail emissions. Yet how high should a carbon tax be? Answering this question requires scientific insights on the costs and benefits of a carbon tax but also ethical - and thus political - judgements on how we value the damages from climate change that will happen in the near and in the far future. This paper reviews the evidence on the social cost of carbon and discusses global and unilateral policy options. It finds that a price of $77 per metric ton of carbon is defensible if we give 95% weight to damages occurring two generations (or 50 years) from now but higher if we want to further reduce the risk of catastrophic change. It is best implemented as part of trade agreements and in combination with R&D investment.
    Keywords: climate change; carbon tax; discounting; policy
    JEL: Q54 Q38 H20 O44
    Date: 2017–12
  20. By: Jędrzej Białkowski (University of Canterbury); Jan Koeman
    Abstract: This study provides evidence of the importance of a well-defined and functioning spot market for the success of the associated futures market. The United States (US) spot market for nonfat dry milk has several distinct pricing indices, whereas the New Zealand (NZ) market has a single spot reference price. Our analysis of hedging effectiveness and hedge ratio persistence shows that none of the US spot market indices may be hedged effectively with the Chicago Mercantile Exchange nonfat dry milk futures at short hedging horizons, whereas the NZ Stock Exchange whole milk powder futures contract is an effective hedge for the Global Dairy Trade spot pricing benchmark. Four important dimensions of spot market design are identified – timeliness, market-based measurement, forward-spot separation, and inclusiveness.
    Keywords: Agricultural Commodities, Hedging; Futures Market Effectiveness; Spot Market Design, Dairy, CME NFDM Futures, NZX WMP Futures, Settlement to Average Spot Price
    JEL: G13 G14 Q14 Q17
    Date: 2017–12–01
  21. By: Bouamra-Mechemache, Zohra; Yu, Jianyu; Zago, Angelo
    Abstract: Collective labels are widespread in food markets, either separated or nested with private brands; the latter known as nested names. We propose a model to explain the rationale of nested names, with collective labels being effective in reaching unaware consumers while individual brands help firms to reach aware consumers. We also incorporate the decision-making within the group of producers joining collective labels, taking into account their heterogeneity in providing quality. We show that nested names emerge when consumers become more aware of information on the label's quality and when producers become more heterogeneous. Welfare may decrease, however, when the group switches to nested names, because nested names may lead to lower quality incentives for the majority producers. The results also provide insights into the historical and recent trends in food industries, such as within-label differentiation and label fragmentation, and their welfare implications.
    Keywords: nested names; individual brands; collective labels; consumers' awareness; producer heterogeneity; quality provision
    JEL: D71 D83 L15 L66 Q13
    Date: 2017–11
  22. By: César Salazar; Sam Jones
    Abstract: Prior to 2009, there was no direct road connection between the southern regions of Mozambique—where the capital city is located—and the more agriculturally-productive central and northern regions. In this paper, we leverage the opening of a major road bridge to identify the impact of enhanced domestic transport infrastructure on agricultural market performance. We apply a generalized difference-in-difference estimator within a dyadic regression context. While we find no reduction in the market price differential around the time the bridge opened for all treated market pairs, there is a significant and persistent price impact only among previously disconnected markets located close to the new bridge. This suggests that new infrastructure can enhance market performance, but such benefits are spatially limited.
    Date: 2017

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