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Microenterprise Supply Chain Intermediation Pilot
Last registered on May 17, 2018

Pre-Trial

Trial Information
General Information
Title
Microenterprise Supply Chain Intermediation Pilot
RCT ID
AEARCTR-0001162
Initial registration date
April 06, 2016
Last updated
May 17, 2018 7:39 AM EDT
Location(s)
Region
Primary Investigator
Affiliation
World Bank
Other Primary Investigator(s)
PI Affiliation
World Bank
Additional Trial Information
Status
In development
Start date
2016-04-08
End date
2018-12-31
Secondary IDs
Abstract
Small-scale vendors in urban slums around the world face considerable inefficiencies in their value chains for inputs that result in high travel costs and higher input prices, and limited product diversity for consumers. For example, vendors in the slums of Bogota spend an average of 15 hours per week and 20 percent of their weekly revenue travelling to make inventory purchases, and because they purchase small quantities at any point in time, do not benefit from bulk discounts. There is a coordination failure amongst such firms, since competition and lack of trust between each other prevents them from banding together to share travel costs and combine discounts. A start-up based in Colombia, aims to overcome this problem by leveraging mobile phone technology to aggregate small vendors’ demand for produce, creating collective orders which add up to wholesale quantities, and delivering the goods directly to firms from farms, cutting out middlemen in the supply chain. This impact evaluation will test the effectiveness of this new technology.
This approach will be tested in a pilot program in Bogota. A census of 2,500 vegetable vendors in poor neighborhoods in the south of Bogota was conducted, and these firms were subdivided into 60 geographic blocks. Within each block, the baseline survey assesses whether or not firms would be interested in using the services . We then randomly assign 30 of these blocks to be treatment blocks, and 30 to be control. Within each treated block, those firms which indicated their interest in the program will be marketed the service. High-frequency surveys will then measure the prices, unit costs, travel time, and profits and sales of both interested and uninterested firms in treatment and control blocks over time.
External Link(s)
Registration Citation
Citation
Iacovone, Leonardo and David McKenzie. 2018. "Microenterprise Supply Chain Intermediation Pilot." AEA RCT Registry. May 17. https://doi.org/10.1257/rct.1162-3.0
Former Citation
Iacovone, Leonardo and David McKenzie. 2018. "Microenterprise Supply Chain Intermediation Pilot." AEA RCT Registry. May 17. https://www.socialscienceregistry.org/trials/1162/history/29561
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Experimental Details
Interventions
Intervention(s)
The intervention consists of leveraging mobile phone technology to aggregate small vendors’ demand for produce, creating collective orders which add up to wholesale quantities, and delivering the goods directly to firms from farms, cutting out middlemen in the supply chain.
Intervention Start Date
2016-04-29
Intervention End Date
2017-05-31
Primary Outcomes
Primary Outcomes (end points)
The Primary Research Questions and Main Outcomes are:
1) Can the technological solution offered overcome coordination issues among firms to reduce the amount of time they spend travelling to purchase inventories? [travel time measured in surveys]
2) Does the technology lower the cost firms pay for their inventories? [measured by surveys and market price collection]
3) Are lower costs passed onto consumers in terms of lower prices? [measured by surveys of good prices]
4) Do the lower costs and incomplete pass-through or elastic demand result in higher sales and higher profits for firms? [measured by surveys]
5) Do non-participating firms lose sales as a result of their competitors having lower prices or longer opening hours? [measured by surveys]
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
2500 firms in 60 market blocks will be randomly assigned to treatment (30 blocks) and control (30 blocks). Within each block, vendors will be screened for interest in the new service. The direct effect of treatment will be obtained by comparing interested firms in treated blocks to interested firms in control blocks; the indirect effects by comparing uninterested firms.
Experimental Design Details
Randomization Method
Randomization done by computer
Randomization Unit
market block (consisting of approximately 30-40 firms).
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
60 market blocks
Sample size: planned number of observations
2,500 firms
Sample size (or number of clusters) by treatment arms
450-600 interested firms in treatment, 450-600 interested firms in control; 300-450 uninterested firms in treatment, 300-450 uninterested firms in control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Included in grant applications: Since these firms are all operating in the same sector, selling similar products at the same scale, they will be more homogeneous than firms in many standard PSD interventions. This should improve the power of our experiment to detect impacts. Moreover, we believe that unit costs and travel time should be highly correlated over time, and will use multiple weeks of data to further improve power. The baseline data is required to fine-tune these power calculations, as we stand ready to adjust the design as needed if we find that based on the baseline data and initial take-up results that power is lower than anticipated. That said, here are some initial power calculations based on two outcomes that we have used to help guide our preliminary choices on sample size. We assume take-up of the intervention will be 65% among those who express interest–this is conservative, given Agruppa have found approximately 80% take it up in their initial pilots. Our design at present is then random assignment at the market block level of 30 blocks to treatment and 30 to control, with each block containing 20 firms interested in the intervention, for a total of 600 treated and 600 control firms among the interested (we also have uninterested firms in each block). Our starting point assumptions are that i) key outcomes are likely to be highly autocorrelated (firms that have long travel times today will have long travel times in a month due to geography, mode of transport, etc.); ii) key outcomes will have strong intra-cluster correlations in the cross-section within market blocks (e.g. firms that are all within the same block will charge similar prices and have similar travel times to market); and iii) the intra-cluster correlations will be much weaker in terms of changes (firms within blocks experience different shocks and react differently to the intervention). To see this, consider the time in hours per week spent to travel to market. In the cross-section at time t, we model this for firm i in block b as: Outcome 1: Reduction in travel time spent by firms to buy goods from the central market Assumptions: Mean weekly travel time of 15 hours (estimated by Agruppa), standard deviation 5 hours, intra-cluster correlation of 0.6 (since firms within markets will have similar travel times). The intervention aims to reduce hours by an average of 5. The ITT is thus 3.25 hours (5*0.65). Power using just a single round of follow-up data: If randomization was at the individual level, power is 1: sampsi 15 11.75, sd(5) n1(600) n2(600) gives power of 1 and we would need only 38 firms in each group to get 80% power sampsi 15 11.75, sd(5) power(0.8) But with an intra-cluster correlation of 0.6, and 20 firms per market, we need a minimum of 48 blocks (and hence 472 in each treatment group) to achieve 80 percent power. Power using the baseline to improve power: We assume now that using the baseline hours we have an autocorrelation of 0.7 with follow-up hours, so the residual variance becomes sqrt(1-0.72)*5 = 3.57 hours. We assume that this then reduces the intra-cluster correlation in hours to 0.3 (once the blockb component has been removed). Then we have: sampsi 15 11.75, sd(3.75) power(0.8) sampclus, obsclus(20) rho(.3) Gives a minimum of 15 blocks, and 141 treated and 141 control in total needed.
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Human Subjects Committee for Innovations for Poverty Action IRB-USA
IRB Approval Date
2016-04-04
IRB Approval Number
14020
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers