Trains, Trade and Transaction Costs: How does Domestic Trade by Rail affect Market Prices of Malawi Agricultural Commodities?

Wouter Zant

No 15-055/V, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We measure 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% to 17% 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 the lack of intertemporal arbitrage. Overall, impacts are remarkably similar in size across commodities.

Keywords: trade; crop prices; transaction costs; rail infrastructure; Malawi; sub Saharan Africa (search for similar items in EconPapers)
JEL-codes: D23 F14 N77 O18 O55 Q13 (search for similar items in EconPapers)
Date: 2015-05-18, Revised 2016-07-22
New Economics Papers: this item is included in nep-dev and nep-tre
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Trains, Trade, and Transaction Costs: How Does Domestic Trade by Rail Affect Market Prices of Malawi Agricultural Commodities? (2018)
Working Paper: Trains, trade and transaction costs: how does domestic trade by rail affect market prices of Malawi agricultural commodities ? (2017)
Working Paper: Trains, Trade and Transaction Costs: How does Domestic Trade by Rail affect Market Prices of Malawi Agricultural Commodities? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20150055

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