DP9491 | Mobile Phone Coverage and Producer Markets: Evidence from West Africa

Publication Date

26/05/2013

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Abstract

Expansion in mobile phone coverage has improved access to information throughout the developing world, particularly within sub-Saharan Africa. The existing evidence suggests that information technology has improved market efficiency and reduced consumer prices for certain commodities. There are fewer studies assessing the impact of the technology on producers. Using market-level data we estimate the impact of mobile phone coverage on producer prices in Niger. We find that mobile phone coverage reduced the spatial dispersion of producer prices by 6 percent for a semi-perishable commodity, cowpea. These effects are strongest for remote markets and lowest at harvest time. Mobile telephony, however, has no effect on price dispersion for millet and sorghum, two storable crops. There is also no impact on the average producer price, but mobile phone coverage is associated with a reduction in the intra-annual price risk, primarily for cowpeas. These findings are confirmed by data from a farmer-level survey: we find that farmers owning mobile phones obtain more price information but do not engage more in spatial arbitrage and hence do not receive higher prices ? except for peanuts. The additional evidence presented here helps understand how mobile phone coverage affects agricultural market efficiency in developing countries. It suggests that the impact differs across agents ? depending on whether they use the information for arbitrage or not ? and across crops ? depending on whether inter-temporal arbitrage is possible or not.