Grain Distribution in Ghana under Imperfectly Competitive Market Conditions

Interspatial and intertemporal grain distribution in Ghana is a private sector activity carried out mainly by traders. These traders sometimes collude to maximize their joint profits. By so doing they influence the conduct of the grains market. To examine the effect of their actions on the informal maize market in Ghana, a spatial equilibrium model was estimated under three scenarios: (1) Perfect competition, (2) Cournot-Narsh conjectures, and (3) Collusion. The results indicate that imperfect competition distorts grain flows, reduces consumer welfare and depresses traders’ sales revenue. Collusive behavior of traders, on the other hand, causes the greatest distortion of grain flows as well as trader and consumer welfare. These results draw attention to policy makers and development agents to educate traders against using their associations to foster collusion.

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JEL Codes:
D4; L1

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

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