We use a BDM mechanism to recover revealed preference estimates of transportation costs along feeder roads for truckers using these randomized subsidies (Berry et al., 2020). We focus on the cost of a single trip between a remote community and the nearest market, as qualitative work has suggested this is the service truckers typically contract over with farmers or rural aggregators in remote communities. Truckers are randomly assigned a price for providing transportation services to randomly selected rural aggregators and farmers. To implement this, we offer traders a contract to provide a single trip of transportation services to a selected rural aggregator and 5 selected farmers. The contract will ask the trucker to ration space in the truck first to the farmers and then to the rural aggregator. We ask the trucker the minimum price they would need to be paid to fulfill this contract, and then randomly select a price from a range of prices. If the minimum price they requested is higher than the selected price, then no transaction occurs. However, if the minimum price they requested is lower than the selected price, they are paid the selected price conditional on fulfilling the contract. To minimize probability of default, the contracts will include a stamp indicating formal endorsement. Standard theory suggests that traders will bid their marginal cost of providing transportation services, which is useful for measurement. We implement this WTA exercise for both the 2023 long rainy season (2023A) and the 2023 short rainy season (2023B) harvests.
Farmers and Rural aggregators
Within each village, we randomize which farmers or aggregators the truckers will be connected to. For both farmers and rural aggregators, they will be informed at the start of the 2023A and 2023B seasons just before planting and told that these services will be made available at the end of 2023A and 2023B. In communities where only one trucker bid below their offered price for transportation services, we will ask that they coordinate with the 5 selected farmers, and that priority for space in the truck go to the farmers. In communities where 0 truckers bid below their offered price for transportation services, we will identify a fourth trucker and pay them the prevailing price for transportation services where one exists, in order to ensure that selected farmers and rural aggregators in each community receive transportation services. In communities not yet accessible by road because their feeder road segment has not yet been rehabilitated and no road accessible to vehicles exists that can reach the remote community, this intervention will not be possible. Comparisons across farmers and rural aggregators within community allow estimates of the impacts of reduced transportation costs on producer prices.