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Using individual-level randomized treatment to learn about market structure


Casaburi, Lorenzo; Reed, Tristan (2022). Using individual-level randomized treatment to learn about market structure. American Economic Journal: Applied Economics, 14(4):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.

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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:General economics, econometrics and finance
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 October 2022
Deposited On:06 Oct 2022 10:49
Last Modified:28 Mar 2024 02:38
Publisher:American Economic Association
ISSN:1945-7790
OA Status:Green
Publisher DOI:https://doi.org/10.1257/app.20200306
Other Identification Number:merlin-id:22802
  • Content: Published Version