The Ethiopian Commodity Exchange and spatial price dispersion

In this article, we study the impact of an institutional intervention on market efficiency in Ethiopia. More specifically, we study whether regional warehouses that are connected to a national commodity exchange reduce transaction cost and price dispersion between regions. In order to identify the causal effect we take advantage of the fact that the warehouses that are connected to the Ethiopian Commodity Exchange were sequentially rolled out. Using retail price data and information about warehouse operation from 2007-2012, we find that the average price spread between market pairs is reduced by 0.86-1.775 ETB when both markets have an operating warehouse. This is a substantial reduction considering that the average price spread over the full period is 3.33 ETB.

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Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
ISSN (2192-3248) (Other)
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JEL Codes:
D47; O10; Q11; Q13; Q18
Series Statement:
Global Food Discussion Paper Series

 Record created 2017-04-01, last modified 2020-10-28

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