Do Marketing Channel Reforms Increase Competition? Evidence from Indian Produce Markets

In this paper Alé Chilet and Itin-Shwartz (2020) study the effectiveness of marketing channel liberalization in increasing competition among traders and prices obtained by farmers for their produce. Regulated market places are considered to concentrate market power in the hands of licensed traders and provide low prices to farmers. The authors evaluate two types of reforms: (i) 'in-market amendments', aimed at increasing competition and efficiency within regulated markets, and (ii) 'out-of- market amendments', aimed at allowing alternative marketing channels outside of regulated markets. They take advantage of a marketing channel reform proposed by the central government of India in 2003 and adopted by individual states in subsequent years. A difference-in-differences specification is applied to compare reformed and non-reformed states before and after the reform. They find a 4% overall increase in prices for in-market-reforms, and no effect for out-of-market reforms. They also find that market concentration among regulated markets increased following the reforms.