Using Individual-Level Randomized Treatment to Learn about Market Structure
American Economic Journal: Applied Economics
vol. 14,
no. 4, October 2022
(pp. 58-90)
Abstract
Interference across competing firms in RCTs can be informative about market structure. An experiment that subsidizes a random subset of traders who buy cocoa from farmers in Sierra Leone illustrates this idea. Interpreting treatment-control differences in prices and quantities purchased from farmers through a model of Cournot competition reveals differentiation between traders is low. Combining this result with quasi-experimental variation in world prices shows that the number of traders competing is 50 percent higher than the number operating in a village. Own-price and cross-price supply elasticities are high. Farmers face a competitive market in this first stage of the value chain.Citation
Casaburi, Lorenzo, and Tristan Reed. 2022. "Using Individual-Level Randomized Treatment to Learn about Market Structure." American Economic Journal: Applied Economics, 14 (4): 58-90. DOI: 10.1257/app.20200306Additional Materials
JEL Classification
- L13 Oligopoly and Other Imperfect Markets
- L14 Transactional Relationships; Contracts and Reputation; Networks
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q13 Agricultural Markets and Marketing; Cooperatives; Agribusiness
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