Market Power and Spatial Competition in Rural India*

• 成果类型: Article
• 署名作者: Chatterjee, Shoumitro
• 署名单位: Johns Hopkins University
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjad004
• 发表日期: 2023
• 页码: 1649-1711
• 关键词: GOVERNMENT INTERVENTION; TRADE; gains; EFFICIENCY; geography; collusion; returns; markups; BORDERS; prices

摘要

Market power of intermediaries contributes to the low incomes of farmers in India. I study the role of spatial competition between intermediaries in determining the prices that farmers receive in India by focusing on a law that restricts farmers to selling their goods to intermediaries in their own state. I show that the discontinuities in market power generated by the law translate into discontinuities in prices. Increasing spatial competition by one standard deviation causes prices received by farmers to increase by 6.4%. I propose and estimate a quantitative spatial model of bargaining and trade to shed light on spatial and aggregate implications. Estimates from the structural model suggest that removing the interstate trade restriction in India would increase competition between intermediaries. Thereby average farmer prices and their output would increase by at least 11% and 7%, respectively. The value of the national crop output would increase by at least 18%. However, there are distributional consequences as well, as some farmers stand to lose due to increased local production.