smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

day of the week effects and asset returns the number of empirical studies using daily stock returns is rapidly increasing researchers generally assume that the distribution of stock returns is identical for all days of the week a convenient statistical assumption but not a necessary condition of market equilibrium nevertheless there are reasons to suspect that the distribution of returns may vary according to the day of the week the most obvious is the impact of weekends on monday s return since monday s return is calculated over three instead of one calender day the mean and variance may well be higher on monday compared with any other daily return perhaps three times as large previous research has examined the daily distribution of stock returns for a monday effect while fama 1965 does not compare daily mean returns he does report that monday s variance is about 20o greater than other daily returns with a traditional distributional assumption regarding the returns on a financial asset specifies that the expected returns are identical for all days of the week contrary to this plausible assumption this paper discovers that the expected returns on common stocks and treasury bills are not constant across days of the week the most notable evidence is for monday s returns where the mean is unusually low or even negative several explanations of the results are investigated but none proves satisfactory aside from documenting significant day of the week effects the implications of the results for tests of market efficiency are examined while market adjusted returns continue to exhibit day of the week effects these effects are no longer concentrated on monday during the last year we have had many conversations with our colleagues throughout the professions we are particularly thankful to the participants at sessions of the western and american finance associations where preliminary versions of this paper were presented special thanks are due to gene fama gailen hite jon ingersoll robert jarrow merton miller clifford smith and rex thompson the expert research assistance of frank rabinovitch and youngsup yun is gratefully acknowledged 1 the list of papers using daily stock returns is too long to name recent examples include charest 1978 dodd 1980 banz 1981 and reinganum 1981

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

can tax loss selling explain the january seasonal in stock returns this paper analyzes the tax loss selling hypothesis as an explanation of the january seasonal in stock returns and argues that rational tax loss selling implies little relation between the january seasonal and the long term loss empirical results show that the january seasonal is as strongly related to the long term loss as it is to the short term loss the evidence is inconsistent with a model that explains the january seasonal by optimal tax trading

comparative advantage in demand and the development of rice value chains in west africa summary national rice development strategies in africa are often supply focused and implicitly assume that consumers will readily substitute imported for domestic rice however due to increasing import dependency urban consumer preferences for rice have become biased toward asian export quality standards against which african rice has difficulties to compete anecdotal evidence suggests that this import bias is higher in cities close to the port and remote from the geographical centers of cultural heritage where african rice was domesticated more than 3 000 years ago we purposely select a sample of five west african urban markets which are supplied by both foreign and domestic rice value chains and which are located at varying distances from the nearest ports and centers of cultural heritage and conduct framed field experiments based on auctions to analyze the drivers of urban demand for domestic rice with upgraded quality characteristics we find that west african rice has increasing difficulties competing against imported rice on urban markets the more consumers appreciate characteristics of imported asian rice the closer to the port and the further the geographical and genealogical distance from rice cultural heritage these challenges provide crucial insights into value chain upgrading in policy makers struggle to achieve rice self sufficiency in west africa our findings suggest that the optimal portfolio of investment in value chain upgrading is a function of the targeted end market and its distance from the port and rice cultural heritage the closer the end market is located toward the port the more investment is needed in lifting demand of domestic rice through quality upgrading branding and promotion to enable it to compete against imported rice proximity to centers of cultural heritage on the other hand endows rice value chains with a comparative advantage in demand requiring less investment in demand lifting and leaving more room for supply shifting investments

on the optimality of the full cost pricing abstract this article is aimed at defining the full cost pricing as a leader follower game in two tier organizations i the upstream unit fixes the production capacity and uses it as a cost driver to compute the average cost ii the downstream unit operates on the market and chooses the output level on the basis of the average cost in the cournot oligopoly case the full cost pricing is compared with other pricing rules there exists a wide range of values of the fixed cost for which the full cost pricing dominates any other pricing rules in terms of gross profit

home biased gravity the role of migrant tastes in international trade abstract immigrants tend to buy products from their home countries as a result the more immigrants of a given ethnicity a country has the more it will tend to import from those immigrants countries of origin this effect of migrant heterogeneity is ignored by the standard gravity literature that assumes homogeneous preferences among resident consumers this paper embeds that observed regularity into a structural gravity model gravity derived from the almost ideal demand system generates bilateral trade shares with three distinct components ethnic composition of the resident population bilateral trade cost and per capita income using international trade and transnational migration data among 40 countries this paper estimates the home bias of each ethnic group in tastes the results show that consumers tastes for products from their country of origin deviate from unbiased levels by 35 percent on average ethnic taste bias is found to explain half of the trade bias counterfactuals suggest that anti immigration policy significantly impedes trade with immigrants countries of origin

seasonalities in security returns the case of earnings announcements abstract we document a seasonal pattern in stock returns around quarterly earnings announcement dates small firms show large positive abnormal returns and a sizable increase in the variability of returns around these dates only part of the large abnormal returns can be accounted for by the tendency of firms with good news to announce early large firms show no abnormal returns around announcement dates and a much smaller increase in variability

the day of the week effect the international evidence abstract we re examine the day of the week effect for eleven indexes from nine countries during the 1969 1992 period the standard methodology as well as the moving average methodology are used and we find returns to be lower at the beginning of the week but not necessarily on monday for the full period as in chang et al international evidence on the robustness of the day of the week effect journal of financial and quantitative analysis 28 1993 497 514 the anomaly disappears for the most recent period in the usa however the effect is still strong for european countries hong kong and toronto

growing their own unobservable quality and the value of self provisioning abstract many important food quality and safety attributes are unobservable at the point of sale particularly in informal markets with weak reputation effects through a framed field experiment conducted in western kenya we show that farmers place a large premium on maize they have grown themselves relative to that available for purchase providing information on the origin of maize and on its taste and safety reduces this gap we conclude that information which is unavailable during typical market transactions is important to how consumers value maize and that imperfect information may contribute to the prevalence of agricultural production for subsistence needs in developing countries

entry and managerial incentives abstract this paper presents a two period full information model of entry where owners of incumbent and entrant firms endogenously select the incentive schemes for their managers it is shown that when output decisions are delegated to managers the incumbent s owner chooses to base incentive schemes only partly on profit but if output decisions are reached via nash bargaining between managers the incumbent s owner will base the reward on profit alone the entrant never bases the incentive scheme solely on profit if there is a sufficiently high fixed cost of entry then the incumbent can deter entry by providing management with appropriate incentive schemes

managerial incentives and the price effects of mergers most analysis of market power assumes that managers are perfect agents for shareholders this paper relaxes that assumption when managers of a multi product firm exert unobservable effort to improve product quality there is a trade off between providing adequate effort incentives and ensuring sufficient price coordination between the product divisions this makes some intra firm price competition optimal explaining why many multi product firms allow for competition between divisions when there are effort spillovers the optimal amount of price competition can be as great as when the products are under separate ownership even with some profit sharing intra firm price competition can reduce quality adjusted price which has important implications for antitrust policy

stock return seasonalities and earnings information previous literature documents significant seasonalities in stock market returns one explanation is seasonality in earnings information if true a return index comprised solely of firms reporting earnings should exhibit stronger intertemporal seasonalities than a return index comprised of firms not reporting earnings employing all new york and american stock exchange firms over six years this study examines the seasonality of stock returns generally seasonal patterns for reporting returns are found to be similar to or slightly weaker than for nonreporting returns thus it is doubtful that earnings news seasonality induces stock return seasonality

cash crop production food price volatility and rural market integration in the third world large farmers in the third world often devote to cash crops a larger share of their land than do small farmers this paper suggests a possible explanation even in the presence of food markets third world farmers food security is best assured by food self sufficiency a model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern simulations further indicate that food market integration reduces the need for food self sufficiency policy implications are drawn regarding domestic trade liberalization and agricultural technology

insurance market efficiency and crop choices in pakistan this paper tests the efficiency of insurance markets in the pakistan punjab by examining how crop choices are affected by the presence of price and yield risk we estimate reduced form and structural models of crop choices although we cannot reject the hypothesis that village members efficiently share risk among themselves production choices are shown to depend on risk existing risk sharing and selfinsurance mechanisms thus imperfectly protect punjab farmers against village level shocks results also indicate that households respond to consumption price risk thereby suggesting that empirical and theoretical work on risk should avoid putting an exclusive emphasis on yield and output price risk

estimating price discounts for low quality maize in sub saharan africa evidence from benin summary this article uses household data from benin to estimate the extent that markets in sub saharan africa discount damaged maize stated preference methods indicate that a 10 increase in insect damage results in a 9 maize price discount however revealed preference methods indicate that this discount is only 3 discounts are larger immediately after harvest than they are in the lean period when maize is scarce our results help explain why many smallholder farmers sell maize at harvest rather than making the effort to preserve grain of good quality for later in the season when it may fetch a higher price

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

from t bills to common stocks investigating the generality of intra week return seasonality the authors investigate the extent to which intra week seasonality still exists and whether its pattern is uniform across three stock indices and treasury bonds with seven different maturities they find that intra week seasonality continues to be significant and that its pattern is not uniform either between the stock indices and the treasury bonds or even among the bonds alone a pattern shared by stocks and bonds is that monday returns become increasingly negative with maturity these findings suggest that neither institutional nor general equilibrium explanations by themselves can explain the pattern of intra week seasonality in securities markets

day of the week and intraday effects in stock returns abstract this study examines day of the week effects using hourly values of the dow jones industrial average we find that over the 1963 1983 period the weekend effect has sifted from characterizing active trading on monday to characterizing the non trading weekend over the early part of our sample period negative returns characterize each hour of trading on monday while the return from friday close to monday open is positive in the most recent subperiod monday average hourly returns after noon are all positive and the weekend effect is due to negative average returns from friday close to monday open

trade tastes and nutrition in india this paper introduces habit formation into an otherwise standard model of international trade household tastes evolve over time to favor foods consumed as a child the opening of trade causes preferred goods to rise in price as these were relatively inexpensive in autarky neglecting the correlation between tastes and agro climatic endowments overstates the short run nutritional gains from agricultural trade liberalization and masks potential caloric losses for laborers i examine the predictions of this model of trade with habit formation using household survey data from india both by looking across indian regions and by examining the consumption patterns of inter state migrants

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

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

the asian crisis and calendar effects on stock returns in thailand abstract this paper systematically examines daily returns of the thai stock market index to determine whether there is evidence of calendar effects due to the day of the week the month of the year days before or after holidays and within month effects particular attention is given to the evidence of these anomalies prior to during and after the asian crisis most of the previous empirical evidence examines each of these effects in isolation the approach adopted within this paper is to start with a general model which incorporates a range of different calendar anomalies before estimating the conditional volatility models daily data from 3rd january 1995 to 29th december 2000 are used for estimation providing 1473 observations the final models are tested by comparing their forecast performance for 2001 244 observations with various models which do not include calendar effects the conclusion is that the inclusion of calendar effects improves the forecast accuracy

transport costs and smallholder cropping choices an application to siaya district kenya smallholders regularly devote shares of resources to low yielding food crops than they do to cash crops that have higher market returns in this paper costly exchange is incorporated into an agricultural household model and a numerical nonseparable version of the model is used to show that seemingly inefficient cropping choices of this type in siaya district kenya can be explained as rational food import substitution given high transport costs in product markets improved rural road networks that reduce these costs could abate motives to meet food needs through domestic production and promote specialization that raises farm incomes

opportunism incentives and the m form hypothesis a laboratory study abstract opportunism is one central premise of the m form hypothesis this premise is investigated in a laboratory experiment using m form and u form organizations under incentives based on corporate profit and divisional profits there was greater opportunism under u form organization than under the m form and under divisional profit than under corporate profit incentives additionally a misguided altruism lead a number of individuals to misrepresent information the m form yields higher performance than the u form also corporate profit incentives yield higher total profit than divisional profit incentives the results partially explain why empirical studies do not strongly support the m form hypothesis

transfer price and equilibrium in multidivisional firms an examination of divisional autonomy and central control the problem faced by a firm that oversees two divisions one of which produces and one of which uses an intermediate good is considered since divisions have information that is not available to the centre it is useful to allow the divisions some autonomy in their sales and procurement decisions the analysis allows the centre to specify the transfer price that must be used in trades between divisions as well as placing restraints on their ability to trade with outside firms in most of the models presented in this paper the centre cannot observe the market price of the intermediate product and in some models it cannot observe divisional costs it is shown how the centre can obtain the full information solution in the simplest case by using a penalty factor that encourages internal trade however when divisional costs are not observable the full information outcome is not obtainable in this case the optimal value of the penalty factor implies a tradeoff between the benefits of allowing divisions t

the strategic choice of managerial incentives do firms with separate owners and managers maximize profits we address this question for an oligopoly where managers compete in quantities or prices as in the cournot or bertrand models and owners choose their managers incentives we find that there is a strategic aspect in the problem of selecting incentives and that profit maximizing behavior does not result in particular in the oligopoly we study the behavior of firms competing in quantity price more closely resembles perfectly competitive collusive behavior than cournot bertrand behavior

internal organization and managerial compensation in oligopoly abstract we demonstrate that the benefit that an oligopolistic firm derives from departmentalization managerial specialization depends upon the internal organization of the rival firm as a result even if both firms are assumed a priori identical they need not select an identical form of internal organization since the benefit from departmentalization exhibits increasing returns to scale a duopolist derives more restricted benefits from departmentalizing compared with a monopolist the implications of increased competition or the form of internal organization upon the compensation of managers depends upon the degree of correlation between the uncertain demands that face competing firms

stackelberg equilibrium in oligopoly an explanation based on managerial incentives abstract this paper shows that in a model of managerial delegation in a duopoly if an owner s decision to hire a manager is modeled explicitly then the subgame perfect equilibrium may coincide with the stackelberg solution interestingly this can happen even when the cost of hiring a manager is the same for the owner of each firm

farmers subjective valuation of subsistence crops the case of traditional maize in mexico shadow prices guide farmers resource allocations but for subsistence farmers growing traditional crops shadow prices may bear little relationship with market prices we econometrically estimate shadow prices of maize using data from a nationally representative survey of rural households in mexico shadow prices are significantly higher than the market price for traditional but not improved maize varieties they are particularly high in the indigenous areas of southern and southeastern mexico indicating large de facto incentives to maintain traditional maize there

an empirical investigation of the effect of quarterly earnings announcement timing on stock returns this research examines both the association between quarterly announcement timing early or late and the type of news good or bad reported and the relationship between stock returns and timing around the earnings announcement date recent research on announcement timing givoly and palmon 1982 patell and wolfson 1982 kross 1981 and whittred 1980 has provided evidence that delayed announcements of annual earnings more often convey bad news i e lower than expected earnings than do early announcements however we know of no study which has reported evidence of the same phenomenon for quarterly earnings furthermore there is a limited amount of evidence regarding the reaction of market participants to announcement timing while three studies givoly and palmon 1982 kross 1982 and chambers and penman 1984 find that early late announcements are associated with higher lower abnormal returns or high low stock return variability relative to late early announcments only kross 1982 controlled for the sign of the earnings forecast error and none controlled for the magnitude of the earnings forecast error it is well accepted that stock returns are associated with the sign of the earnings forecast error efe since announcement timing is also

one off subsidies and long run adoption experimental evidence on improved cooking stoves in senegal free technology distribution can be an effective development policy instrument if market driven adoption is socially inefficient and hampered by affordability constraints yet policy makers often oppose free distribution arguing that reference dependence lowers the willingness to pay wtp and thus market potentials in the long run for improved cookstoves this paper studies the wtp six years after a randomized one time free distribution in 2009 we demonstrate that the cookstoves were intensely used by the treatment group households in the years after randomization until they reached their designated lifetime using a real purchase offer we find that both treatment and control households reveal a remarkably high wtp in 2015 the estimated confidence interval suggests that we can exclude a substantial negative effect on the treatment group the policy implication is that one time free distribution does not necessarily undermine future market establishment and thus can be an effective policy instrument if rapid dissemination is the objective

intra industry information transfers associated with earnings releases abstract the impact that a firm s earnings releases have on the stock prices of other firms in its industry is examined for an identifiable sub set of firms the results are consistent with a significant information transfer occurring between the earnings release firm and the other firms in its industry this subset is identified by examining the impact of the release on the stock price of the announcing firm the magnitude of this impact is more significant for a sample of firms which have a larger percentage of their revenues in the same line of business as the earnings release firm vis a vis a sample with a lower percentage of their revenues from the same line of business alternative interpretations of the empirical results are also discussed the research findings have implications for information content and market efficiency research and for research on policy issues associated with disclosure regulation

preferences and the home bias in trade abstract why is there less observed trade than is predicted by neoclassical trade models a home bias in consumption due to preferences can partially explain this using data from a randomly assigned auction mechanism and survey conducted in madagascar respondents willingness to pay for rice of varying quality and origin is investigated by imposing a novel structure on traditional valuation collection methods one finds that consumers will pay approximately 8 more for home grown rice the key result is that consumers place greater value on an item produced in their own country without any tangible reason to do so other than the product s origin this preference based explanation is one piece of the mosaic of factors that cause disproportionate consumption of domestically produced goods this paper provides concrete evidence in favor of structuring trade models to allow for an explicit home bias in preferences

a transaction data study of weekly and intradaily patterns in stock returns abstract weekly and intradaily patterns in common stock prices are examined using transaction data for large firms negative monday close to close returns accrue between the friday close and the monday open for smaller firms they accrue primarily during the monday trading day for all firms significant weekday differences in intraday returns accrue during the first 45 minutes after the market opens on monday mornings prices drop while on the other weekday mornings they rise otherwise the pattern of intraday returns is similar on all weekdays most notable is an increase in prices on the last trade of the day

should multiproduct firms provide divisional or corporate incentives abstract this paper points out some of the implications of the internal organization of a multiproduct firm for its market conduct in particular we study the strategic use of organizational forms based on corporate incentives versus forms based on divisional incentives the equilibrium internal organization is determined in a model with full information it is shown that firms provide corporate incentives when goods are substitutes and divisional incentives when goods are complements and the result holds both in the case of quantity setting and price setting

a selectivity model of household food marketing behavior in sub saharan africa the agricultural household s discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy conditional on participation failure to participate in markets results from high fixed transactions costs a selectivity model endogenously switches households into alternative market participation states correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions improved market information increases the probability of participation by sellers while access to cereals processing technology increases quantities transacted by both sellers and buyers conditional on participation