Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90613
Authors: 
Saenger, Christoph
Torero, Maximo
Qaim, Matin
Year of Publication: 
2013
Series/Report no.: 
GlobalFood Discussion Papers 18
Abstract: 
We study the effect of alleviating information asymmetry regarding product quality that is widespread in developing-country agricultural markets. Opportunistic buyers may underreport quality levels back to farmers to reduce the price they have to pay. In response, farmers may curb investment, negatively affecting farm productivity. In an experiment, we entitle randomly selected smallholder dairy farmers in Vietnam to independently verify milk testing results. Treatment farmers use 13 percent more inputs and also increase their output. We show that the buying company had initially not underreported product quality, which is why third-party monitoring led to a Pareto improvement in the supply chain.
Subjects: 
Contract farming
Information asymmetry
Third-party enforcement
Experimental economics
Framed field experiment
Dairy
Agribusiness
Vietnam
JEL: 
C93
D86
L14
O13
Q12
Q13
Document Type: 
Working Paper

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