# **1. Introduction**

As a crucial staple crop in Eastern and Southern Africa, the production and marketing of maize have been <mark>the focus of governments’ food security and poverty alleviation strategies. Restricting cross-country trade through export bans in an attempt to stabilize domestic prices has been a particularly popular policy tool used by many sub-Saharan African (SSA) countries in recent years. Previous studies have shown that such export bans could have adverse medium-long-term impacts on prices by creating market uncertainty and on grain production by discouraging investment in agriculture. However, we know little about how the variability in harvests and seasonality – two critical dimensions of smallholder agriculture in Africa – mediate the effects of export bans on household welfare. In this study, we assess the short-term impact of export bans on prices and welfare of households in Malawi, accounting for these heterogeneities and</mark> complement the existing evidence on the topic.

<mark>A challenge in identifying the impact of export bans on maize is that the timing of these policies is likely to be driven by domestic market conditions and harvest conditions. In order to isolate the effect of the policy separately from other drivers of prices, we use a novel identification strategy that borrows from the gravity model of trade literature. We compare the change in price dispersion between a domestic market in Malawi and another market in a neighboring country, relative to the price dispersion between the domestic market and other markets within Malawi that are at a similar distance as the domestic-foreign market pair. Measuring this relative difference between periods with and without export bans allowing us to capture the effect of the policy change. The fundamental assumption underlying our analysis is that export bans do not affect within-country price dispersions. Our model and data allow us to test this assumption, and we provide empirical evidence to show that the assumption holds.</mark> Malawi is not an exception when it comes to grain market controls. Historically, developing countries, including Malawi’s neighbors (Zambia and Tanzania), have intervened in grain markets whenever they experience significant food inflation or face a server production deficit for their major staples. In the wake of the 2007-08 food price spike, these countries renewed their efforts to intervene and regulate agricultural markets with the objectives of ensuring domestic food security and price stability. Such measures included a slew of trade of controls such as temporary restrictions on exports of food grains and other staples (Sharma, 2011) as well as active interventions in the grain markets through price regulation, direct purchases, storage, and other discretionary policies (Chapato and Jayne, 2009). Maize has been the focus of these policies within SSA, given that maize is of strategic importance for both producers and consumers in these countries. These policies generally aim to maintain affordable prices for consumers of maize, and simultaneously also attempt to ensure viable prices for maize farmers and seek to reduce the volatility of prices. Given the multitude of objectives, governments often engage in a mix of policies, and measuring the net impacts of such policy measures on prices and welfare can be challenging, both theoretically and empirically. An additional empirical challenge arises due to the simultaneous existence of restrictive trade regimes in neighboring countries.

<mark>The data and the empirical strategy that we use in this study allows us to overcome these challenges and isolate the short-run effects of the trade policies on maize prices and, subsequently, the welfare implications for maize producers and consumers in Malawi. We assemble a panel dataset of monthly market prices from 152 markets in Malawi and neighboring Tanzania, Mozambique, and Zambia from 2006 to 2018. We</mark> 2