Middlemen, Bargaining and Price Information: Is Knowledge Power?∗
نویسنده
چکیده
This paper investigates an important channel through which improved access to market information could increase the prices that producers receive from middlemen. I develop a theoretical model of trade between a farmer and a middleman which allows for the existence of different types of middlemen. The source of heterogeneity is attitudes towards fairness. I provide an empirical test of the theory from an original framed field experiment carried out with farmers and middlemen in India. The model predicts that there will be a non-monotonic relationship between the benefit of information and the cost of switching to a new middleman. The results of the experiment support the predictions of the model and demonstrate that actual middlemen differ in their attitudes towards fairness, middlemen make higher offers when the farmer is informed, and the benefit of information to the farmer varies with the cost of switching.
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