Market Power and Spatial Competition in Rural India

Abstract Market power of intermediaries contributes to the low incomes farmers in India. I study role spatial competition between determining prices that receive India by focusing on a law restricts selling their goods own state. show discontinuities market generated translate into prices. Increasing one standard deviation causes received increase 6.4%. propose and estimate quantitative model bargaining trade shed light aggregate implications. Estimates from structural suggest removing interstate restriction would intermediaries. Thereby average farmer output at least 11% 7%, respectively. The value national crop 18%. However, there are distributional consequences as well, some stand lose due increased local production.