Working Paper

Do Consumers Benefit from Supply Chain Intermediaries? : Evidence from a Policy Experiment in the Edible Oils Market in Bangladesh

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Emran, M. Shahe
dc.contributor.author
Mookherjee, Dilip
dc.contributor.author
Shilpi, Forhad
dc.contributor.author
Uddin, M. Helal
dc.date.accessioned
2016-08-09T16:44:49Z
dc.date.available
2016-08-09T16:44:49Z
dc.date.issued
2016-07
dc.date.lastModified
2020-12-04T11:07:31Z
dc.description.abstract
Commodity traders are often the focus of popular resentment. Food price hikes in 2007-2008 resulted in protests and food riots, and spurred governments to regulate traders. In March 2011, Government of Bangladesh banned delivery order traders in the edible oils market, citing cartelization, and replaced them with a dealer's network appointed by upstream refiners. The reform provides a natural experiment to test alternative models of marketing intermediaries. This paper develops three models and derives testable predictions about the effects of the reform on the intercept of the margin equation and pass-through of international price. Using wheat as a comparison commodity, a difference-of-difference analysis of high frequency price data shows that the reform led to (i) an increase in domestic prices and marketing margins, and (ii) a weakening of the pass-through of imported crude prices. The evidence is inconsistent with the standard double-marginalization-of-rents model wherein intermediaries exercise market power while providing no value-added services, or with a model where delivery order traders provide credit to wholesalers at below-market interest rates. The evidence supports a model where delivery order traders relax binding credit constraints faced by the wholesale traders.
en
dc.identifier
http://documents.worldbank.org/curated/en/2016/07/26578630/consumers-benefit-supply-chain-intermediaries-evidence-policy-experiment-edible-oils-market-bangladesh
dc.identifier.uri
http://hdl.handle.net/10986/24826
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper;No. 7745
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
marketing intermediary
dc.subject
trader margin
dc.subject
commodity prices
dc.subject
market power
dc.subject
double marginalization
dc.subject
supplier credit
dc.subject
credit rationing
dc.subject
international prices
dc.subject
passthrough
dc.subject
edible oils
dc.title
Do Consumers Benefit from Supply Chain Intermediaries?
en
dc.title.subtitle
Evidence from a Policy Experiment in the Edible Oils Market in Bangladesh
en
dc.type
Working Paper
en
okr.crossref.title
Do Consumers Benefit from Supply Chain Intermediaries? Evidence from a Policy Experiment in the Edible Oils Market in Bangladesh
okr.date.disclosure
2016-07-18
okr.doctype
Publications & Research
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.docurl
http://documents.worldbank.org/curated/en/2016/07/26578630/consumers-benefit-supply-chain-intermediaries-evidence-policy-experiment-edible-oils-market-bangladesh
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-7745
okr.identifier.externaldocumentum
090224b084466fe5_1_0
okr.identifier.internaldocumentum
26578630
okr.identifier.report
WPS7745
okr.imported
true
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2016/07/18/090224b084466fe5/1_0/Rendered/PDF/Do0consumers0b0market0in0Bangladesh.pdf
en
okr.region.administrative
South Asia
okr.region.country
Bangladesh
okr.topic
Agriculture :: Food Markets
okr.topic
Macroeconomics and Economic Growth :: Commodities
okr.topic
Macroeconomics and Economic Growth :: Economic Theory & Research
okr.topic
Macroeconomics and Economic Growth :: Markets and Market Access
okr.unit
Environment and Energy Team, Development Research Group

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