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The Relevance of a Rules-Based Maize Marketing Policy : An Experimental Case Study of Zambia

ACCOUNTING ACUTE FOOD SHORTAGES AGRICULTURAL DEVELOPMENT AGRICULTURAL ECONOMICS AGRICULTURAL POLICY AGRICULTURAL PRODUCTIVITY AGRICULTURE AUCTION AUCTIONS AVERAGE PRICE CENTRAL ASIAN COLLUSION COMPETITIVENESS CONFIDENCE CONSUMER DEMAND CONSUMER PRICE CONSUMER PRICES CONSUMER WELFARE DEMAND ELASTICITY DEMAND FUNCTION DEMAND FUNCTIONS DEMOCRACY DISCRETION DOMESTIC MARKET EFFICIENT MARKET EXPENDITURES EXTERNAL MARKETS FARM PRODUCTIVITY FARM PRODUCTIVITY GROWTH FOOD AID FOOD AVAILABILITY FOOD CRISIS FOOD MARKETING FOOD MARKETING SYSTEMS FOOD MARKETS FOOD POLICY FOOD POLICY RESEARCH FOOD PRICES FOOD SECURITY FOOD SECURITY POLICY FOOD SECURITY RESEARCH FOOD SHORTAGE FOOD SHORTAGES FOOD STOCKS FOOD SUPPLIES FOOD SUPPLY GOVERNMENT OFFICIALS IMPORTING MAIZE INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INVESTIGATION MAIZE MAIZE IMPORTS MAIZE MARKET MAIZE MARKETING MAIZE MEAL MAIZE PRODUCTION MAIZE REVOLUTION MAIZE SECTOR MAIZE SUPPLY MAIZE TRADING MARKET CONDITIONS MARKET EQUILIBRIUM MARKET FLUCTUATIONS MARKET INFORMATION MARKET LIBERALIZATION MARKET PARTICIPANTS MARKET PERFORMANCE MARKET POWER MARKET PRICE MARKET PRICES MARKET REFORM MARKET REFORMS MARKET RISKS MARKETING MARKETING BOARD MARKETING BOARDS MARKETING POLICY MARKETING SYSTEM MEAL MILLERS MINISTER MINISTERS NATIONAL FARMERS UNION NATIONAL FOOD SECURITY PATRONAGE PRICE FLUCTUATIONS PRICE INDEX PRICE STABILITY PRICE STABILIZATION PRICING POLICIES PRODUCER PRICE PRODUCER PRICES PURCHASING RULING PARTY SALE SALES SMALLHOLDER AGRICULTURE STOCKS SUB-SAHARAN AFRICA SUBSIDIZED GRAIN SUBSTITUTE SUPPLIERS SUPPLY CURVES SURPLUSES TRANSPARENCY TRIALS TYING WHITE MAIZE
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World Bank, Washington, DC
Africa | Zambia
2012-06-01T22:07:15Z | 2012-06-01T22:07:15Z | 2008-09

Strategic interaction between public and private actors is increasingly recognized as an important determinant of agricultural market performance in Africa and elsewhere. Trust and consultation tend to positively affect private activity while uncertainty of government behavior impedes it. This paper reports on a laboratory experiment based on a stylized model of the Zambian maize market. The experiment facilitates a comparison between discretionary interventionism and a rules-based policy in which the government pre-commits itself to a future course of action. A simple precommitment rule can, in theory, overcome the prevailing strategic dilemma by encouraging private sector participation. Although this result is also borne out in the economic experiment, the improvement in private sector activity is surprisingly small and not statistically significant due to irrationally cautious choices by experimental governments. Encouragingly, a rules-based policy promotes a much more stable market outcome, thereby substantially reducing the risk of severe food shortages. These results underscore the importance of predictable and transparent rules for the state's involvement in agricultural markets.

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