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Bayes estimates of distance-to-market: Transactions costs, cooperatives and milk-market development in the Ethiopian highlands

Holloway, G. ORCID:, Ehui, S. and Teklu, A. (2008) Bayes estimates of distance-to-market: Transactions costs, cooperatives and milk-market development in the Ethiopian highlands. Journal of Applied Econometrics, 23 (5). pp. 683-696. ISSN 0883-7252

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To link to this item DOI: 10.1002/jae.1019


Rationalizing non-participation as a resource deficiency in the household, this paper identifies strategies for milk-market development in the Ethiopian highlands. The additional amounts of covariates required for Positive marketable surplus -'distances-to market'-are computed from a model in which production and sales are correlated; sales are left-censored at some Unobserved thresholds production efficiencies are heterogeneous: and the data are in the form of a panel. Incorporating these features into the modeling exercise ant because they are fundamental to the data-generating environment. There are four reasons. First, because production and sales decisions are enacted within the same household, both decisions are affected by the same exogenous shocks, and production and sales are therefore likely to be correlated. Second. because selling, involves time and time is arguably the most important resource available to a subsistence household, the minimum Sales amount is not zero but, rather, some unobserved threshold that lies beyond zero. Third. the Potential existence of heterogeneous abilities in management, ones that lie latent from the econometrician's perspective, suggest that production efficiencies should be permitted to vary across households. Fourth, we observe a single set of households during multiple visits in a single production year. The results convey clearly that institutional and production) innovations alone are insufficient to encourage participation. Market-precipitating innovation requires complementary inputs, especially improvements in human capital and reductions in risk. Copyright (c) 20 08 John Wiley & Sons, Ltd.

Item Type:Article
Divisions:Life Sciences > School of Agriculture, Policy and Development
ID Code:8673
Uncontrolled Keywords:VARIABLES, INDEX

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