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Abstract
This dissertation looks at the relationship between agro-food markets, social networks and welfare in Sub-Saharan Africa. Economists have long recognized the importance of information for the efficient functioning of markets. Due to limited or costly information, excess price dispersion is a common occurrence in developing countries. In this context, a new search technology can have important implications for market performance and hence welfare. The first chapter of this dissertation looks at the impact of a new search technology, mobile phones, on grain market performance in Niger. I construct a novel theoretical model of trader search, and use the framework to derive two testable hypotheses. Using a time-series panel dataset, I exploit the quasi-experimental nature of the rollout of mobile phone towers in Niger to estimate the impact of cell phones on grain market performance. I find that cell phones are associated with a reduction in price dispersion across markets in Niger and in the intra-annual coefficient of variation. The effect is stronger for markets that are farther apart, and for those that are linked by poor quality roads. Cell phones are more useful as a higher percentage of markets have cell phone coverage. The results suggest that cell phones are associated with lower consumer prices, and hence improved welfare.
The second chapter of this dissertation assesses grain market performance in a different context, namely during a severe food crises. In 2004, a drought occurred in Niger, resulting in a food crisis that affected 2.5 million Nigeriens. I exploit the exogenous nature of rainfall to test whether a market failure occurred in 2005. I find that markets are fairly integrated, and that drought is associated with a decrease in price dispersion across markets. This effect is stronger when a higher percentage of markets are affected, as was the case in 2004/2005. These results suggest that markets performed well during the food crisis, but that the spatial distribution of drought lowered incentives to import from a key trading partner, Nigeria.
The third chapter of this dissertation looks at a different aspect of welfare, focusing on the impact of social networks on household income. Using a household-level dataset from Tanzania, I find that households who are members in community-based organizations have higher household expenditures and are associated with a lower probability of being poor.