Competition in the Sierra Leone cocoa value chain

Last registered on August 31, 2021

Pre-Trial

Trial Information

General Information

Title
Competition in the Sierra Leone cocoa value chain
RCT ID
AEARCTR-0002037
Initial registration date
August 31, 2021
Last updated
August 31, 2021, 2:11 PM EDT

Locations

Region

Primary Investigator

Affiliation
University of Zurich

Other Primary Investigator(s)

PI Affiliation
World Bank

Additional Trial Information

Status
Completed
Start date
2011-09-24
End date
2011-12-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In this field experiment, we study competition among traders who purchase cocoa from farmers in Sierra Leone and sell it to wholesalers, We provide a random group of traders a bonus per pound of cocoa. We study the effect of the intervention on the prices traders pay and the credit they provide to farmers and on the quantity they purchase from farmers. We interpret treatment-control differences in prices and quantities purchased from farmers through a standard model of Cournot competition to derive estimates of trader differentiation, which is found to be low. Combining this result with quasi-experimental variation in world prices we can also estimate that the number of traders effectively competing is 50% higher than the number operating in a village, highlighting the challenge of defining market boundaries. In turn, own-price and cross-price supply elasticities are high. These estimates suggest farmers face a competitive market in the first stage of the value chain.
External Link(s)

Registration Citation

Citation
Casaburi, Lorenzo and Tristan Reed. 2021. "Competition in the Sierra Leone cocoa value chain." AEA RCT Registry. August 31. https://doi.org/10.1257/rct.2037-1.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2011-10-15
Intervention End Date
2011-12-31

Primary Outcomes

Primary Outcomes (end points)
Treatment and control differences in prices paid to farmers, credit provided to farmers and quantities purchased from farmers. Combined with quasi-experimental variation in the world price of cocoa, these results are used to estimate three structural parameters in a model of trade competition: trader differentiation, the slope of the supply curve, and the number of traders operating in the market
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We developed our experiment in partnership with five privately owned wholesalers in Sierra Leone’s cocoa producing Eastern Province, in the towns of Segbwema, Pendembu, and Kailahun. These wholesalers collect cocoa in their warehouses, and then sell it on to exporters in the provincial capital of Kenema. Our sample includes 80 traders who sell to the wholesalers. This comprises almost all of the traders who do business regularly with these wholesalers. During the experiment, a random subset of 40 traders received a bonus of 150 Leones per pound of cocoa —5.6% of the average wholesale price —when selling grade A cocoa purchases from farmers to the wholesalers.
Experimental Design Details
Randomization Method
Computer randomization
Randomization Unit
Individual (trader)
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
80 traders
Sample size: planned number of observations
80 traders
Sample size (or number of clusters) by treatment arms
40 traders received treatment
40 traders in the control group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
MIT Committee on the Use of Humans as Experimental Subjects
IRB Approval Date
2011-05-01
IRB Approval Number
1105004470

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
December 31, 2011, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
December 31, 2011, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
80 traders
Final Sample Size (or Number of Clusters) by Treatment Arms
40 traders received the treatment 40 traders in the control group
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
In this field experiment, we study competition among traders who purchase cocoa from farmers in Sierra Leone and sell it to wholesalers, We provide a random group of traders a bonus per pound of cocoa. We study the effect of the intervention on the prices traders pay and the credit they provide to farmers and on the quantity they purchase from farmers. We interpret treatment-control differences in prices and quantities purchased from farmers through a standard model of Cournot competition to derive estimates of trader differentiation, which is found to be low. Combining this result with quasi-experimental variation in world prices we can also estimate that the number of traders effectively competing is 50% higher than the number operating in a village, highlighting the challenge of defining market boundaries. In turn, own-price and cross-price supply elasticities are high. These estimates suggest farmers face a competitive market in the first stage of the value chain.
Citation
Casaburi, Lorenzo, and Tristan Reed. "Using individual-level randomized treatment to learn about market structure." Working Paper, March 2021

Reports & Other Materials