Fostering Official Trade

Last registered on May 13, 2025
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Pre-Trial

Trial Information

General Information

Title
Fostering Official Trade
RCT ID
AEARCTR-0013919
Initial registration date
July 30, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
July 30, 2024, 10:21 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
May 13, 2025, 6:53 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
Kenya
Region

Primary Investigator

Name
Eleanor Wiseman
Affiliation
U.C. Berkeley
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Mattea Stein
PI Affiliation
University of Naples
Contact Investigator
PI Name
Paolo Falco
PI Affiliation
University of Copenhagen
Contact Investigator

Additional Trial Information

Status
On going
Start date
2023-11-01
End date
2025-06-30
Keywords
Behavior, Firms & Productivity, Governance, Labor
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In much of the developing world, a large fraction of cross-border trade is conducted by small-scale traders who are often unregistered (informal) or on the verge of informality. These traders face a common question: whether to choose official or unofficial routes when crossing the border. When they use unofficial crossings, they can avoid paying tariffs and limit delays due to official procedures, but they incur significant risks as trading unofficially may result in fines, confiscation of goods, and arrest, or in having to pay bribes to the police to avoid getting caught. The choice between formality and informality is affected by information frictions (knowing the costs and benefits of the different options) and credit constraints (having resources to pay the costs of trading formally). This project will implement two interventions to test for the role of these two constraints. Using a sample of traders who commonly engage in cross-border trading between Kenya and Uganda and through an RCT, we will estimate (i) the impact of receiving a subsidy to (partly) pay for the cost of trading formally and (ii) the additional impact of receiving up to date information about the relative risks and benefits of choosing official vs unofficial crossings; on traders' choice of border crossing (i.e. formalization), and firm performance. We will also investigate the persistence of behavior change for both treatment arms.
External Link(s)

Registration Citation

Citation
Falco, Paolo , Mattea Stein and Eleanor Wiseman . 2025. "Fostering Official Trade." AEA RCT Registry. May 13. https://doi.org/10.1257/rct.13919-1.1
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
The intervention includes two treatment groups and one control group.

- TREATMENT 1 - CASH: Traders receive incentives in the form of cash conditional on using official border crossings.
- TREATMENT 2 - CASH + INFORMATION: Traders receive incentives in the form of cash conditional on using official border crossings AND information about the risks of crossing the border officially vs unofficially.
- CONTROL: Traders do not receive any treatment.
Intervention (Hidden)
Intervention Start Date
2024-08-05
Intervention End Date
2024-10-31

Primary Outcomes

Primary Outcomes (end points)
- Number of cross-border trading trips
- Number of cross-border trading trips through official border crossings;
- Number of cross-border trading trips through unofficial border crossings;
- Business performance (e.g., volume of trade, number of employees, revenue, profit);

These outcomes will be measured through a high-frequency phone survey and an in-person endline survey.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
- Cross-border trading activities (number and types of goods; consistency of trips; crossing points);
- Domestic trading activities (any; number and types of goods);
- Business scale (number and type of markets used (selling and buying); consistency; number of supplyers; any new suppliers; any new customers; changed trading activities (new products, new markets, new trading routes);
- Profit re-investment (profit margin; share of profits re-invested; usage of windfall profits);
- Liquidity constraints (accumulation of last trip profits needed to conduct next trip; cash availability constrains desired trading trips);
- Credit (formal credit; informal borrowing);
- Financial health (savings; loans repaid);
- Assets and investment (value of goods stocks; purchase of vehicles, agricultural assets, household assets; improvements to dwelling; other significant purchases; use of rosca to finance trips);
- Household welfare (food expenditures; missed meals; meat consumption; expenditures on "special foods", school fees, medical expenses, funerals/weddings, gifts, other important items);
- Labor supply (hours worked in trading; hours worked in agriculture; hours worked in other income generating activities);
- Beliefs about trading profitability (number of possible profitable trips next months; plan to engage in more trips; min/max expected trading trip profit);
- Coordination among traders (e.g., in organizing trading trips, looking for sellers/customers, sharing information)
- Incidence of key risks (bribe-paying, harassment, confiscation of goods, arrest) at the official and unofficial border;
- Beliefs about key risks (bribe-paying, harassment, confiscation of goods, arrest) at the official and unofficial border; feeling safe at official border; gender issues at border;
- Monetary Cost of crossing the border (including official costs, and unofficial costs, e.g. bribes).

These outcomes will be measured through an in-person endline survey, and a small subset through a high-frequency phone survey.

Dimensions of heterogeneity analysis include: gender; baseline: degree of formality, beliefs, firm size, border crossing/location, types of goods traded, experience/age, trading intensity (number of crossings), is a farmer, number of markets/suppliers bought from, number of markets sold to, domestic trade vs cross-border only, exporter/importer.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The design of the RCT includes a baseline, an intervention, high-frequency follow-up phone calls, and an endline in-person survey.

We randomly sample traders who commonly engage in cross-border trading between Kenya and Uganda. We randomize traders into treatment 1 and control, and assign a second randomly sampled group to treatment 2. Control subjects (randomized) will not receive any treatment. Treatment 1 - CASH (randomized) will consist of cash payments conditional on conducting trading trips through official border crossings. Treatment 2 - CASH + INFORMATION (randomly sampled) will combine Treatment 1 with information from our baseline survey on the relative risks of conducting cross-border trade through official and unofficial border crossings.
Experimental Design Details
Randomization Method
The randomization will be carried out using software that will assign participants to the different experimental groups.
Randomization Unit
Individual trader
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
464
Sample size: planned number of observations
464
Sample size (or number of clusters) by treatment arms
179 traders CONTROL, 178 traders CASH treatment, 107 traders INFORMATION + CASH treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Research Ethics Committee at the Department of Economics at University of Copenhagen
IRB Approval Date
2024-07-30
IRB Approval Number
N/A
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials