Trains, Trade and Transaction Costs : How Does Domestic Trade by Rail Affect Market Prices of Malawi Agricultural Commodities?
This paper measures the impact of low-cost transport by rail in Malawi on the dispersion of agricultural commodities prices across markets by exploiting the quasi-experimental design of the nearly total collapse of domestic transport by rail in Jan...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/393461498762732861/Trains-trade-and-transaction-costs-how-does-domestic-trade-by-rail-affect-market-prices-of-Malawi-agricultural-commodities http://hdl.handle.net/10986/27635 |
| Summary: | This paper measures the impact of
low-cost transport by rail in Malawi on the dispersion of
agricultural commodities prices across markets by exploiting
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. Market
pairs connected by rail when the railway line was
operational are intervention observations. Railway transport
services explain a 14 percent to 17 percent reduction in
price dispersion across markets. Geographical reach of trade
varies by crop, most likely related to storability and
geographical spread of production. Perishability appears to
increase impact reflecting limited scope for arbitrage.
Overall, impacts are remarkably similar in size across commodities. |
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