# V. SUMMARY AND CONCLUSION

In this study, we have measured the impact of railway services on the dispersion of market prices of agricultural commodities in Malawi. For this purpose, we have exploited the quasi-experimental design of the nearly total collapse of domestic transport by rail in January 2003 due to the destruction of a railway bridge at Rivirivi, Balaka. Estimations are based on monthly market prices of four agricultural commodities (maize, groundnuts, rice, and beans), in 27 local markets, for the period 1998–2006. The measured impact varies from a reduction in price dispersion of 9.5% to 12% in the short run to 14% and 17% in the long run, when railway transport is possible. Perishable and low value crops (respectively beans and maize) tend to be traded over smaller distances and storable high-value crops over larger distances (rice and groundnuts). There is some support for a relatively larger impact on perishable commodities (beans) reflecting the limited scope for intertemporal arbitrage. Results depend critically on the maximum distance between market pairs, the period included before and after the collapse, and which markets are assumed to be connected by rail. Estimations are robust for including covariates and various subsets of control groups.

Conflict of interest: none declared.

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