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How big is your neighbourhood? Spatial implications of market participation among Filipino smallholders

Holloway, G. ORCID: and Lapar, M. L. A. (2007) How big is your neighbourhood? Spatial implications of market participation among Filipino smallholders. Journal of Agricultural Economics, 58 (1). pp. 37-60. ISSN 0021-857X

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To link to this item DOI: 10.1111/j.1477-9552.2007.00077.x


We present a procedure for estimating two quantities defining the spatial externality in discrete-choice commonly referred to as 'the neighbourhood effect'. One quantity, the propensity for neighbours to make the same decision, reflects traditional preoccupations; the other quantity, the magnitude of the neighbourhood itself, is novel. Because both quantities have fundamental bearing on the magnitude of the spatial externality, it is desirable to have a robust algorithm for their estimation. Using recent advances in Bayesian estimation and model comparison, we devise such an algorithm and illustrate its application to a sample of northern-Filipino smallholders. We determine that a significant, positive, neighbourhood effect exists; that, among the 12 geographical units comprising the sample, the neighbourhood spans a three-unit radius; and that policy prescriptions are significantly altered when calculations account for the spatial externality.

Item Type:Article
Divisions:Life Sciences > School of Agriculture, Policy and Development
ID Code:8676
Uncontrolled Keywords:Bayesian estimation and model comparison, neighbourhood effects, smallholder market access, spatial probit model, AUTOREGRESSIVE MODELS, MARGINAL LIKELIHOOD, BAYESIAN-ESTIMATION, TRANSACTIONS COSTS, DISTRIBUTIONS, CONVERGENCE, INFERENCE, BEHAVIOR, AFRICA, OUTPUT

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