I exploit the quasi experimental nature of the roll-out of the mobile phone network from 1997 to 2009 in Mozambique, to estimate impact of search costs on the dispersion of maize prices and transport costs. The rollout explains a 4.5-11 percent reduction in maize price dispersion, and a larger reduction in per ton km transport costs. The evidence suggests that traders benefit by capturing more rent income. Increased efficiency is mainly associated with lower prices for consumers. Various sources of heterogeneity are identified: the reduction is larger for markets that are far apart, for source markets with higher mobile phone coverage and during droughts.
1 Jun 2017
The Annual Bank Conference on Africa (The World Bank)