Market institutions, transaction costs, and social capital in the Ethiopian grain market
Using a New Institutional Economics framework, this research report addresses a fundamental aspect of markets: how do buyers and sellers find each other and coordinate the transfer of goods? The report quantifies the transaction costs related to search faced by traders in Ethiopia and analyzes the r...
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| Format: | Abstract |
| Language: | Inglés |
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International Food Policy Research Institute
2001
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| Online Access: | https://hdl.handle.net/10568/156190 |
| _version_ | 1855543673833390080 |
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| author | Gabre-Madhin, Eleni Zaude |
| author_browse | Gabre-Madhin, Eleni Zaude |
| author_facet | Gabre-Madhin, Eleni Zaude |
| author_sort | Gabre-Madhin, Eleni Zaude |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Using a New Institutional Economics framework, this research report addresses a fundamental aspect of markets: how do buyers and sellers find each other and coordinate the transfer of goods? The report quantifies the transaction costs related to search faced by traders in Ethiopia and analyzes the role of brokers in minimizing these transaction costs. The transaction costs of market search are significant in the Ethiopian grain market. Estimated as the opportunity cost of labor time spent searching for a trading partner and the opportunity cost of holding capital fixed during that search, these costs represent one-fifth of all marketing costs. This research report demonstrates that traders minimize their transaction costs of search by using brokers, who enable them to exchange with unknown partners. The report also shows that at the level of the grain economy as a whole, brokers significantly increase the total economic welfare by enabling a more efficient allocation of search effort by traders. Thus, traders with relatively higher search efficiency and lower search costs choose to search on their own, while traders with lower search efficiency and higher search costs choose to use a broker. |
| format | Abstract |
| id | CGSpace156190 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2001 |
| publishDateRange | 2001 |
| publishDateSort | 2001 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1561902025-01-10T06:42:43Z Market institutions, transaction costs, and social capital in the Ethiopian grain market Gabre-Madhin, Eleni Zaude grain trade economics marketing governance Using a New Institutional Economics framework, this research report addresses a fundamental aspect of markets: how do buyers and sellers find each other and coordinate the transfer of goods? The report quantifies the transaction costs related to search faced by traders in Ethiopia and analyzes the role of brokers in minimizing these transaction costs. The transaction costs of market search are significant in the Ethiopian grain market. Estimated as the opportunity cost of labor time spent searching for a trading partner and the opportunity cost of holding capital fixed during that search, these costs represent one-fifth of all marketing costs. This research report demonstrates that traders minimize their transaction costs of search by using brokers, who enable them to exchange with unknown partners. The report also shows that at the level of the grain economy as a whole, brokers significantly increase the total economic welfare by enabling a more efficient allocation of search effort by traders. Thus, traders with relatively higher search efficiency and lower search costs choose to search on their own, while traders with lower search efficiency and higher search costs choose to use a broker. 2001 2024-10-24T12:43:26Z 2024-10-24T12:43:26Z Abstract https://hdl.handle.net/10568/156190 en Open Access application/pdf International Food Policy Research Institute Gabre-Madhin, Eleni Zaude. 2001. Market institutions, transaction costs, and social capital in the Ethiopian grain market. Research Report Abstract 124. https://hdl.handle.net/10568/156190 |
| spellingShingle | grain trade economics marketing governance Gabre-Madhin, Eleni Zaude Market institutions, transaction costs, and social capital in the Ethiopian grain market |
| title | Market institutions, transaction costs, and social capital in the Ethiopian grain market |
| title_full | Market institutions, transaction costs, and social capital in the Ethiopian grain market |
| title_fullStr | Market institutions, transaction costs, and social capital in the Ethiopian grain market |
| title_full_unstemmed | Market institutions, transaction costs, and social capital in the Ethiopian grain market |
| title_short | Market institutions, transaction costs, and social capital in the Ethiopian grain market |
| title_sort | market institutions transaction costs and social capital in the ethiopian grain market |
| topic | grain trade economics marketing governance |
| url | https://hdl.handle.net/10568/156190 |
| work_keys_str_mv | AT gabremadhinelenizaude marketinstitutionstransactioncostsandsocialcapitalintheethiopiangrainmarket |