case studies about PERFECT COMPETITION MARKET STRUCTURE. Review related previous studies. Competition in Agricultural Markets: An Experimental Approach*

Lorenzo Casaburi Tristan Reed

April 2017

introduction

theory and concepts

review related previous studies

conclusions

CASE STUDY : COMPETITION IN AGRICULTURAL MARKET

METHOD:

1.Focused to the link closest to production-farmers to traders to wholesaler.

2.Worked with the partner wholesalers to develop a quantitative quality grade that correlates well with baseline prices in order for them to measure price for a well- defined homogenous goods

3.They chose to partner with 5 privately owned wholesaler in Sierra Leone. These companies have an exclusive relationship with their traders

4.Bonus given to traders when they sell grade A cocoa to the wholesaler

5.Traders often offer loans to farmers. They do this by offering to buy their cocoa in advance even before harvesting begins. Farmers then use this money towards production of cocoa.

6.Quality of cocoa was measured by an expert, and traders would usually mix cocoa from different farmers in the same bag, so farmer prices reported are the average per unit

purchase price paid by a trader for the cocoa in the bag

EXPERIMENTAL RESULT

1.Trader prices would follow wholesaler and also global market for cocoa price

2.For farmers getting advance pay from the traders, this advantage does not affect the price sold the trader, however there might be a difference in effective prices paid taking into account the advances received.

3.The bulk quantities bought buy both control and study traders were almost similar within the first 3 weeks of the harvesting season and the trend decreases when the season is about to be over.

4.The farmers value traders that would provide advances and showed indifference to traders who does not offer one even though they are willing to buy their crop at a higher price.