Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh
- (pp. 202-36)
Abstract
Traders are often blamed for high prices, prompting government regulation. We study the effects of a government ban of a layer of financing intermediaries in edible oil supply chain in Bangladesh during 2011–2012. Contrary to the predictions of a standard model of an oligopolistic supply chain, the ban caused downstream wholesale and retail prices to rise, and pass-through of the changes in imported crude oil price to fall. These results can be explained by an extension of the standard model to incorporate trade credit frictions, where intermediaries expand credit access of downstream traders.Citation
Emran, M. Shahe, Dilip Mookherjee, Forhad Shilpi, and M. Helal Uddin. 2021. "Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh." American Economic Journal: Applied Economics, 13 (3): 202-36. DOI: 10.1257/app.20190083Additional Materials
JEL Classification
- L13 Oligopoly and Other Imperfect Markets
- L14 Transactional Relationships; Contracts and Reputation; Networks
- L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q11 Agriculture: Aggregate Supply and Demand Analysis; Prices
- Q13 Agricultural Markets and Marketing; Cooperatives; Agribusiness
- Q17 Agriculture in International Trade
There are no comments for this article.
Login to Comment