Price, Quality, and Competition in Agricultural Input Markets in Kenya
Presented by:
Jeremy Foltz
Agricultural & Applied Economics
University of Wisconsin-Madison
Thursday, April 4, 2024
3:45 pm-5:00 pm
Taylor-Hibbard Seminar Room (Rm103)
A now burgeoning literature has suggested that input markets in Africa are less than fully competitive and sell seeds and fertilizers that are low quality at high prices. This work analyses data from an RCT where a high quality seller of seeds and fertilizers enters a random set of markets, thereby creating differential competition potentially in both the price and quality space. We test whether this high quality entrant affects: market entry and exit, prices, quality of inputs sold, and markups for existing stores. Results show mostly null effects in price and quality of products, which is consistent with a non-collusive Bertrand pricing outcome. Where we find effects of the high quality entrant, they are within short distances, suggesting highly spatially determined markets. The mostly null effects suggest higher levels of competition in African input markets than suggested by the literature, which also points toward different policy options for governments trying to improve agricultural input use.