Independent research & practical ideas for global prosperity

Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger

Feb 12, 2008

Featuring
Jenny C. Aker
Ph.D. Candidate, University of California, Berkeley

Tuesday, February 12, 2008
12:00pm--1:00pm
(Please bring a lunch--drinks provided)

at
Center for Global Development
1800 Massachusetts Avenue, NW, Third Floor, Washington, DC
Closest Metro: Dupont Circle on Red Line

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Abstract: Due partly to costly information, price dispersion across markets is common in developed and developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders and other market actors. We construct a novel theoretical model of sequential search, in which traders engage in optimal search for the maximum sales price, net transport costs. The model predicts that cell phones will increase traders' reservation sales prices and the number of markets over which they search, leading to a reduction in price dispersion across markets. To test the predictions of the theoretical model, we use a unique market and trader dataset from Niger that combines data on prices, transport costs, rainfall and grain production with cell phone access and trader behavior.

Download Does Digital Divide or Provide? (pdf, 447K)