Abstract

Estimating the Benefits from Improved Market Information

Using a partial equilibrium model, the benefits of providing improved agricultural market information to farmers and small-scale traders of maize, millet, sorghum and paddy rice in Mali are estimated.  The value of information is estimated as the reduction in dead-weight loss when farmers and small-scale traders with rational expectations respond to improved price forecasts from Market Information Systems.  The study finds that benefits from improved information, which can also be viewed as a reduction of the cost of being off the equilibrium price and quantity, are great when there is high uncertainty about future prices, high own-price elasticity of supply, low own-price elasticity of demand, and high value of crop output.  The study suggests that crop-specific, localized Market Information Systems (MIS) designed based on local area supply and demand responses to prices have higher returns than national uniformly distributed MISs covering a wide range of commodities in the country.