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September 28, 2022American Economic Journal Applied Economics28 citationsOpen Access

Using Individual-Level Randomized Treatment to Learn about Market Structure

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LCLorenzo CasaburiTRTristan Reed

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Abstract

Interference across competing firms in RCTs can be informative about market structure. An experiment that subsidizes a random subset of traders who buy cocoa from farmers in Sierra Leone illustrates this idea. Interpreting treatment-control differences in prices and quantities purchased from farmers through a model of Cournot competition reveals differentiation between traders is low. Combining this result with quasi-experimental variation in world prices shows that the number of traders competing is 50 percent higher than the number operating in a village. Own-price and cross-price supply elasticities are high. Farmers face a competitive market in this first stage of the value chain. (JEL L13, L14, O13, Q12, Q13)

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Casaburi et al. (2022) studied this question.

synapsesocial.com/papers/69d6f1b339aaaf0da5ab3992https://doi.org/10.1257/app.20200306
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