Can agricultural traders be trusted? Evidence from Ethiopia

Traditional food marketing systems in developing countries are presumed to suffer from a number of deficiencies. Policy makers therefore often try to regulate them and modern private market arrangements are increasingly emerging to help deal with some of the deficiencies. However, it is unclear if and to what extent regulation and modernization affects governance of these markets. We look in this paper at the case of coffee in urban markets in Ethiopia. We find no significant cheating with weights but there is illegal trade, with significant non-allowed trade of export quality coffee in local markets, and a consistent pattern of mis-representation of not easily verifiable quality characteristics. We further find that modernizing marketing formats, including modern retail, and branded and packaged products, deliver higher quality (at a high price) but they are not more trustworthy than traditional ones along these three dimensions.

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 Record created 2017-04-01, last modified 2018-01-23

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