realizing the gains from trade export crops marketing costs and poverty this paper explores the role of export costs in the process of poverty reduction in rural africa the authors claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and thus to higher poverty they test the model using data from the uganda national household survey the findings show that i farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in marketendowed villages ii market availability leads to increased household participation in export cropping coffee tea cotton fruits and iii households engaged in export cropping are less likely to be poor than subsistence based households the authors conclude that the availability of markets for agricultural export crops helps realize the gains from trade this result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor

price setting power vs private information an experimental evaluation of their impact on holdup abstract this paper investigates the extent of the holdup problem in a buyer seller relationship in which the seller has private information about his alternative opportunities theory predicts that compared to a situation in which outside options are publicly observed the seller obtains an informational rent whereas the buyer bears an informational loss as a result the seller is predicted to invest more while the buyer is expected to invest less in contrast to this private information has no impact on the investment levels observed in the experiment but actual investments do increase with the price setting power of the investor these findings are roughly consistent with a model in which agents are inequality averse overall the results question some recent theoretical suggestions that private information rents might substitute for price setting power in mitigating holdup

conflicting tasks and moral hazard theory and experimental evidence abstract we study a multi task principal agent problem in which tasks can be in direct conflict with each other in theory it is difficult to induce a single agent to exert efforts in two conflicting tasks because effort in one task decreases the success probability of the other task we have conducted an experiment in which we find strong support for the relevance of this incentive problem in the presence of conflict subjects choose two efforts significantly less often when both tasks are assigned to a single agent than when there are two agents each in charge of one task

the urban subsistence labor force toward a policy oriented and empirically accessible taxonomy abstract this paper responds to recent arguments that the informal sector is an extremely fuzzy concept and that the formal informal dichotomy does not serve as a useful description of welfare or income a taxonomic system is proposed that is intended to supplement but not replace the long accepted formal informal system by focusing on labor force units rather than firms the proposed system provides an analytical category that is equivalent to the urban working poor and thus has significant advantages for the study of such topics as income distribution rural urban migration and poverty

urban employment and the labor market in developing nations urban employment in developing countries is actually richer and considerably more diverse and rural urban migration is less ill fated than can be inferred from the literature this paper focuses on 1 urban labor force growth 2 urban labor market structure outcomes and processes and 3 the interplay among economic growth traditional factors and the urban labor market the assumption that urban unemployment is typically high or rising has never been clearly established this review of the functioning of urban labor markets emphasizes 3 points prevailing sectoral aggregations fail as examples of dual labor markets urban wage rigidity is not typical and there are enough indications of a dispersed wage structure tending toward equilibrium the diverse migratory and employment channels and probabilities also suggest decentralized and flexible adjustments rather than a chronically unresponsive unemployment rate these leave us without an economywide theory of urban unemployment but this is not a great loss as more important and troublesome are the pervasive indicators of inequality rents and differential labor utilization and productivity that have no such simple origin and reflect the unequal endowments pockets of privilege and noncompeting traits that are endemic in the social order urbanization is an aspect of economic transformation that involves changes in location and types of economic activity capital widening activities old new input combinations the viability of traditional skills and the economic basis for self employment and entrepreneurship are relatively poorly explained by current models although traditional and modern are seen as opposing factors it is surely a mistake to see the former as extraneous to the process of economic transformation the economic value of traditional skills has been consistently underrated because of an assumption that the urban demand for them is negligible and that the rural labor force is homogenous analyses of urban employment problems in developing countries must embrace 3 neglected but promising directions 1 a focus on the range of capital widening economic activities that cannot be conveniently be classified as either traditional or modern 2 more knowledge about the differentiating elements in the complex traditional sector and 3 more in depth analysis of the microeconomic units that illuminate the choices made by firms and households in a variety of contexts

relational contracts and the theory of the firm relational contracts informal agreements sustained by the value of future relationships are prevalent within and between firms we develop repeated game models showing why and how relational contracts within firms vertical integration differ from those between nonintegration we show that integration affects the parties temptations to renege on a given relational contract and hence affects the best relational contract the parties can sustain in this sense the integration decision can be an instrument in the service of the parties relationship our approach also has implications for joint ventures alliances and networks and for the role of management within and between firms

an economic approach to influence activities in organizations members of organizations spend considerable time effort and ingenuity attempting to influence decision makers such influence activities may bring benefits to the organization but they also involve real costs this essay offers an economic rationale for such influence activity as representing rational self interested behavior in the presence of informational asymmetries and an analysis of how the design of the organization s structure and policies should respond to the incentives for attempting influence it is posited that information valuable for the organization s decision making is directly available only to members of the organization who have some personal stake in the decisions these individuals may then have an incentive to try to manipulate the information they develop and provide in order to influence the resulting decisions to their benefits this can be costly both in degrading the quality of decision making and in diverting the attention and effort of the organization s members from more productive activities the organization has three different methods it can employ to discourage excessive influence activities and to encourage more directly productive uses of time and effort it can limit access to decision makers and participation in decision making it can alter its decision making criteria to favor those performing well in productive activities and it can provide direct financial incentives to encourage the desired allocation of effort it is shown that an efficiently designed organization will use such financial incentives only as a last resort instead it will always first alter its decision participation policies and decisionmaking criteria

subjective performance measures in optimal incentive contracts objective measures of performance are seldom perfect in response incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures this paper explores the combined use of subjective and objective performance measures in respectively implicit and explicit incentive contracts naturally objective and subjective measures often are substitutes sometimes strikingly so we show that if objective measures are sufficiently close to perfect then no implicit contracts are feasible because the firm s fallback position after reneging on an implicit contract is too attractive we also show however that objective and subjective measures can reinforce each other if objective measures become more accurate then in some circumstances the optimal contract puts more weight on subjective measures because the improved objective measures increase the value of the ongoing relationship and so reduce the firm s incentive to renege we also analyze the use of subjective weights on objective performance measures and provide case study evidence consistent with our analyses

fairness and the optimal allocation of ownership rights we report on several experiments on the optimal allocation of ownership rights the experiments confirm the property rights approach by showing that the ownership structure affects relationship specific investments and that subjects attain the most efficient ownership allocation despite starting from different initial conditions however in contrast to the property rights approach the most efficient ownership structure is joint ownership these results are neither consistent with the self interest model nor with models that assume that all people behave fairly but they can be explained by the theory of inequity aversion that focuses on the interaction between selfish and fair players

fairness and incentives in a multi task principal agent model this paper reports on a two task principal agent experiment in which only one task is contractible the principal can either offer a piece rate contract or a voluntary bonus to the agent bonus contracts strongly outperform piece rate contracts many principals reward high effort on both tasks with substantial bonuses agents anticipate this and provide high effort on both tasks in contrast almost all agents with a piece rate contract focus on the first task and disregard the second principals understand this and predominantly offer bonus contracts this behavior contradicts the self interest theory but is consistent with theories of fairness

the digital provide information technology market performance and welfare in the south indian fisheries sector when information is limited or costly agents are unable to engage in optimal arbitrage excess price dispersion across markets can arise and goods may not be allocated efficiently in this setting information technologies may improve market performance and increase welfare between 1997 and 2001 mobile phone service was introduced throughout kerala a state in india with a large fishing industry using microlevel survey data we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion the complete elimination of waste and near perfect adherence to the law of one price both consumer and producer welfare increased

how is the liberalization of food markets progressing market integration and transaction costs in subsistence economies we propose a modification of baulch s parity bounds model to measure the market integration of food markets in developing countries instead of extrapolating a single observation of transaction costs we estimate transaction costs predicted transaction costs compare well with survey data of traders probabilities of market regimes computed on the basis of predicted transaction costs fluctuate significantly and do not support fixed regime probabilities over time the probability of market integration with trade decreases consistently during food shortages increasing either the probability of no trade or loss making trade or the probability of profitable but unexploited trade opportunities the data further support a negative trend in market integration with trade

power in a theory of the firm transactions take place in the firm rather than in the market because the firm offers power to agents who make specific investments past literature emphasizes the allocation of ownership as the primary mechanism by which the firm does this within the contractibility assumptions of this literature we identify a potentially superior mechanism the regulation of access to critical resources access can be better than ownership because i the power agents get from access is more contingent on their making the right investment and ii ownership has adverse effects on the incentive to specialize the theory explains the importance of internal organization and third party ownership

labor market differentiation in a developing economy an example from urban juba southern sudan abstract this study focuses on the nature and determinants of labor market differentiation and household level poverty in urban juba southern sudan using data collected in a recent sample survey of enterprises it finds that indices of human capital play a significant role in labor market outcomes but imperfections in the product and capital markets lead to a highly skewed distribution of income demographic factors at the household level are also important in accounting for economic status the paper concludes that income differentiation and poverty are much more diverse than the simple formal informal sector dichotomy of the labor market which is frequently found in the literature would predict

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

general equilibrium tragedy of the commons many poor economies depend on open access resources for their livelihoods households in resource based economies allocate their time and other factors between resource extraction and other activities as a result factors may shift from one sector to another as marginal returns change this has two important implications first it implies potentially strong linkages between resource and non resource sectors second it means that unmanaged resources cause inefficient allocations of inputs across all sectors and the effects of resource management spill into other sectors we construct a local general equilibrium model that accounts for inputs that over allocate to an open access resource and create a general equilibrium tragedy of the commons this model describes resource rent dissipation more adequately in economies with mobile factors than a model with slowly dissipating rents perfectly mobile factors dissipate rent in every period but endogenous wages cause labor and capital allocations to change with the resource stock we use the model to illustrate medium run impacts of a limit on capital in an artisanal fishery in honduras simulation results reveal that fishery management has economy wide impacts on prices and wages managers in developing countries thus should consider these linkages when implementing policies to conserve fish stocks

face value information and signaling in an illegal market author affiliation trevon d logan the ohio state university and nber 410 arps hall 1945 north high street columbus oh 43210 usa e mail logan 155 osu edu corresponding author manisha shah dagger university of california los angeles and nber 3250 public affairs building los angeles ca 91195 e mail manishashah ucla edu acknowledgment we would like to thank george akerlof rodney j andrews raj arunachalam andrea a cann lisa d cook brahima coulibaly scott cunningham angus deaton avinash dixit claudia d goldin karla hoff joseph kaboski simon loertscher joseph m newhard christina paxson john pepper ruth peterson patricia reagan seth sanders ebonya washington nathan woodfork three anonymous referees and numerous seminar participants who provided helpful suggestions the usual disclaimer applies 1 introductionformal enforcement is often seen as the cornerstone of contract design while information can overcome the problems of asymmetric information akerlof 1970 spence 1973 principals are unlikely to engage agents unless the information conveyed is credible and verifiable while the use of formal institutions such as courts is rare relative to the volume of transactions the standard argument is that the presence of formal institutions gives contracts their authority in schelling s 1960 classic terminology the power to sue and be sued gives parties the ability to make credible enforceable commitments a prerequisite to most transactions without means of redress the information that principals and agents share would a priori have little value numerous studies have documented how informal networks long term relationships and reputations overcome problems of asymmetric information indeed researchers have developed large literatures that look at limited contractibility hart 1995 tirole 1999 and situations in which formal enforcement is costly greif 1993 to consider the additional mechanisms that must be in place if existing institutions are lacking or unable to mediate disputes however the literature has not developed an empirical answer to whether the value of information without formal enforcement approaches its value when formal enforcement is present in this article we ask two questions i are formal enforcement mechanisms necessary for the information that principals and agents share to have value ii if not then what is the value of information in an environment without formal enforcement ideally we would like to analyze an illegal market to answer these questions illegal markets rule out the possibility that market function or variation in the information environment is due to the presence of formal enforcement similarly in an illegal market the information that principals and agents convey to one another may not be credible or verifiable and misrepresentation is not likely to be punished the problem is that most illegal markets have coarse information environments it is therefore challenging to obtain information on prices quantities and consumer and producer behavior making empirical answers to these questions especially difficult we overcome these problems by analyzing an illegal market with a rich information structure the online market for male sex work we begin with a general description of this seldom studied market we then document the ways in which the clients of male sex workers informally police the market by informing other clients of deceptive sex workers and by reviewing sex workers on independent client owned web sites the informal policing in the market raises the cost of misrepresentation for would be fraudulent escorts and rewards the truthful self disclosure of honest escorts encouraging truthful self disclosure we further exploit this institutional knowledge to identify the specific information clients treat as signals of escort quality

transaction costs information technologies and the choice of marketplace among farmers in northern ghana using a transactions costs framework we examine the impact of information and communication technologies mobile phones and radios use on market participation in developing country agricultural markets using a novel transaction level data set of ghanaian farmers our analysis of the choice of markets by farmers suggests that market information from a broader range of markets may not always induce farmers to sell in more distant markets instead farmers may use broader market information to enhance their bargaining power in closer markets finally we find weak evidence on the impact of using mobile phones in attracting farm gate buyers

informal export barriers and poverty the author investigates the poverty impacts of informal export barriers like transport costs cumbersome customs practices costly regulations and bribes he models these informal barriers as export taxes that distort the efficient allocation of resources in low income agricultural economies this distortion lowers wages and household agricultural income thereby leading to higher poverty the author investigates the poverty impacts of improving export procedures in moldova this is a unique case study poverty is widespread half of the moldovan population lives in poverty the country is very open and relies on agricultural exports for growth formal trade barriers are fairly liberalized and informal export barriers are common and widespread the author finds that improving export practices would benefit the average moldovan household across the whole income distribution for example halving informal export barriers would cause poverty to decline from 48 3 percent of the population to between 43 3 and 45 5 percent potentially lifting 100 000 180 000 individuals out of poverty

is it enough evidence from a natural experiment in india s agriculture markets access to information and communication technologies icts such as mobile phone networks is widely known to improve market efficiency in this paper we examine whether access to timely and accurate information provided through ict applications has any additional impact using a detailed data set from reuters market light rml a text message service in india that provides daily price information to market participants we find that this information reduces the geographic price dispersion of crops in rural communities by an average of 12 over and above access to mobile phone technology and other means of communication to identify the effect of information on price dispersion we exploit a natural experiment where bulk text messages were banned unexpectedly across india for 12 days in 2010 we find that besides reducing geographic price dispersion rml also increases the rate at which prices converge across india over time we discuss the implications of this for development organizations and informat

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

a transaction level analysis of spatial arbitrage the role of habit attention and electronic trading despite the central role of arbitrage in finance and economic theory there is limited evidence of the factors that create and eliminate arbitrage opportunities how often arbitrage occurs and how profitable it is we address these gaps via a transaction level analysis of spatial arbitrage in the wholesale automotive market we investigate why arbitrage opportunities are created by analyzing how sellers choose where to sell vehicles we find that the attention sellers pay to the distribution of a vehicle is negatively related to the probability that it is arbitraged arbitrage occurs in approximately 1 of transactions although electronic trading is making arbitrage less prevalent by improving buyer seller matching across locations arbitrage yields a 5 6 return on average although arbitrageurs take a loss 14 of the time our results contribute to the literature on arbitrage the effect of attention allocation on market outcomes and the effect of information technology on market efficiency this paper was accepted by brad barber teck ho and terrance odean special issue editors

endogeneity in semiparametric binary response models this paper develops and implements semiparametric methods for estimating binary response binary choice models with continuous endogenous regressors it extends existing results on semiparametric estimation in single index binary response models to the case of endogenous regressors it develops a control function approach to account for endogeneity in triangular and fully simulataneous binary response models the proposed estimation method is applied to estimate the income effect in a labor market participation problem using a large micro data set from the british fes the semiparametric estimator is found to perform well detecting a significant attenuation bias the proposed estimator is contrasted to the corresponding probit and linear probability specifications jel c14 c25 c35 j22

finding missing markets and a disturbing epilogue evidence from an export crop adoption and marketing intervention in kenya in much of the developing world many farmers grow crops for local or personal consumption despite export options that appear to be more profitable thus many conjecture that one or several markets are missing this paper reports on a randomized controlled trial conducted by drumnet in kenya that attempts to help farmers adopt and market export crops drumnet provides smallholder farmers with information about how to switch to export crops makes in kind loans for the purchase of the agricultural inputs and provides marketing services by facilitating the transaction with exporters the experimental evaluation design randomly assigns pre existing farmer self help groups to one of three groups 1 a treatment group that receives all drumnet services 2 a treatment group that receives all drumnet services except credit or 3 a control group after one year drumnet services led to an increase in production of export oriented crops and lower marketing costs this translated into household income gains for new adopters however one year after the study ended the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy european export requirements drumnet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans the risk of such events may explain at least partly why many seemingly more profitable export crops are not adopted

linking smallholder farmers to markets on extensive and intensive margins evidence from nicaragua abstract access to modern commercialization channels is key for smallholder farmers to move away from subsistence farming and overcome poverty however achieving that goal is challenging for smallholders given their lack of appropriate managerial practices production technology and infrastructure this paper examines the association between receiving trainings in two distinct entrepreneurial practices one direct at the individual and farmer association level and another indirect at the community level and commercialization in non local markets at the extensive and intensive margins we exploit a panel dataset of bean producers in nicaragua that participated in an ngo program implemented between 2007 and 2012 we find opposite results for the two market linkage activities especially on the intensive margin or volume of sales while reciving direct training on entrepreneurial practices ep is positively associated with commercialization training on municipality engagement me activities is negatively associated these correlation patterns are mainly observed among entrant farmers as opposed to those already participating in commercial markets prior to the program implementation we also find varying results for me activities by plot size and leadership position additional estimations show that training activities that are positively correlated with bean commercialization are not necessarily correlated with the commercialization of other crops and vice versa

expected product market reforms and technology adoption by senegalese onion producers author s bernard t de janvry a mbaye s sadoulet e abstract the authors 2017 we assess the responsiveness of senegalese onion producers to their knowledge of expected changes in product market conditions whereby onions would no longer be sold based on volume but rather on weight and with labeling certifying quality a village level randomized information campaign on the upcoming introduction of these reforms induced significant investments by farmers into quality enhancing inputs delays in the actual introduction of scales enabled us to rigorously identify positive price effects from these investments our results point to the importance of farmers expectations regarding the improved functioning of product markets in triggering technology adoption

contracts hold up and exports textiles and opium in colonial india trade and export it is argued spur economic growth this paper studies the microeco nomics of exporting we build a heuristic model of transactions between exporters and producers and relate it to east india company operations in colonial bengal our model and the historical record stress two difficulties the exporter and its agents might not uphold payment agreements and producers might not honor sales contracts the model shows when procurement succeeds or fails highlighting the tension between these two hold up problems we analyze several cases including the east india company s cotton textile venture the famous opium monopoly and present day contract farming

measurement of consumer gains from market stabilization for most cases of practical significance in which partial equilibrium analysis is appropriate there is little difference between exact measures of consumer gains from market stabilization and approximations such as expected change in marshallian or hicksian consumer surplus careful specification of the nature of stabilization is more crucial than the choice of welfare measure it is important to represent correctly the demand curvature and supply response and to determine whether general equilibrium responses can be ignored in any event an improved analytical approximation and a simple numerical method for calculating the exact measures make it unnecessary to rely on suspect measures

the price effect of tariff liberalization measuring the impact on household welfare abstract trade policy literature has for many years emphasized open policies positive impact on economic growth and development while these results generally hold when measured on averages empirical evidence suggests that trade liberalization is unlikely to produce beneficial results across all households this study adds to the literature by providing an analysis of the distributive effects of tariff liberalization in mexico the paper examines the effect of tariff liberalization from the perspective of households both as consumers and factor owners allowing for imperfect domestic price transmission the results indicate the overall positive effect of tariff liberalization masks significant differences in the distribution of gains both across income levels and across geographic regions richer households are found to have gained relatively more urban areas as well as mexican states closest to the united states border are also found to be larger beneficiaries while southernmost states have been largely bypassed by the effects of tariff liberalization those results can be explained not only in relation to the different endowments of the households but also by the diverse effects on local prices that has resulted from mexican trade liberalization

getting prices right the impact of the market information service in uganda the market information service project in uganda collected data on prices for the main agricultural commodities in major market centers and disseminated the information through local fmradio stations in various districts exploiting the variation across space between households with and without access to a radio we find evidence suggesting that better informed farmers managed to bargain for higher farm gate prices on their surplus production

implicit contracts incentive compatibility and involuntary unemployment this paper considers the enforceability of employment contracts when employees performance cannot be verified in court so that piece rate contracts are not legally enforceable part i shows that there exists a variety of self enforcing implicit contracts modelled as perfect equilibria in a repeated game and characterizes all the wage and performance outcomes that can be implemented implementation requires a strictly positive surplus from employment the form of the contract depending on how this surplus is divided between firm and employee piece rate contracts and contracts with an informally agreed bonus can be made self enforcing but the use of severance pay and bonding does not extend the set of implementable allocations the resulting contracts resemble actual labor contracts more than do the contracts in standard principal agent models part ii analyses market equilibrium with these contracts also modelled as perfect equilibria in a repeated game and shows that many such equilibria exist unfilled vacancies and unemployed workers can co exist despite the existence of contracts that are potentially mutually beneficial for those jobs that are filled any division of the potential surplus is possible so that the market can have at the same time involuntary unemployment and vacancies that are unfilled despite filled jobs earning positive profits as a criterion for selecting equilibria a notion of renegotiation proofness is applied then either all workers are employed or all jobs filled but any division of the potential surplus is still possible the paper explores what further restrictions on beliefs give rise to a walrasian outcome in which all the potential surplus goes to the short side of the market and to an efficiency wage type outcome in which the potential surplus goes to the long side

rent seeking versus productive activities in a multi task experiment incentive instruments like asset ownership and performance pay often have to strike a balance between the productive incentives and the rent seeking incentives they provide standard theory predicts that these instruments become less attractive when the effectiveness of rent seeking activities increases in contrast theories that emphasize the importance of reciprocity suggest that this relationship may go the other way around in this paper we test these predictions by means of a laboratory experiment by and large our findings confirm standard theory incentive instruments typically become less attractive when the scope for rent seeking activities increases however reciprocity motivations do seem to mitigate the adverse effects of rent seeking opportunities to a considerable extent