Why Don’t Small Firms Merge? Experimental Evidence on Information Barriers

Last registered on March 29, 2021


Trial Information

General Information

Why Don’t Small Firms Merge? Experimental Evidence on Information Barriers
Initial registration date
March 28, 2021

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
March 29, 2021, 10:56 AM EDT

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



Primary Investigator

New York University Abu Dhabi

Other Primary Investigator(s)

PI Affiliation
IZA - Institute of Labor Economics
PI Affiliation
PI Affiliation
New York University Abu Dhabi

Additional Trial Information

On going
Start date
End date
Secondary IDs
This research project aims to experimentally investigate information barriers to small firm consolidation. We exploit rich panel data on the universe of garment making firm owners in Hohoe, Ghana, including owner and owner household characteristics, firm characteristics and outcomes, and reported within-industry peer network interactions. We elicit firm owners’ willingness to pay for information about within-industry peer willingness to hire and be hired by the owner using Becker-Degroot-Marschak method and exploit the conditionally random variation to study the impacts of such information on firm-level growth and profitability as well as dyadic-level mergers.
External Link(s)

Registration Citation

Hardy, Morgan et al. 2021. "Why Don’t Small Firms Merge? Experimental Evidence on Information Barriers." AEA RCT Registry. March 29. https://doi.org/10.1257/rct.7428-1.0
Experimental Details


The intervention is the receipt of (a) list(s) of names of other firm owners the market that are willing to hire or be hired by the treated individual.
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
firm size (number of workers and wage expenses), firm performance (profits and sales), firm boundaries (outsourcing expenses and revenue, capital rental expenses and revenue)
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Following the Becker-Degroot-Marschak (BDM) method, each respondent receives 5
GHC (approximately 91 US cents at the time of the first wave) that can be used as offers
for the lists of other firm owners that are willing to work for or willing to hire the
respondent. Respondents can then bid for each list (in integer amounts), with a maximum
possible bid for each list of 3 GHC. Then, the price for the list is randomly drawn and takes
integer values between 0 and 4 GHC. If the bid is greater than or equal to the price, then
the list is successfully purchased, and any amount not spent is returned to the respondent
in cash. Each respondent was also placed into four different treatment groups, where the
information on the list varied. These groups are further described in the attached analysis plan.
Experimental Design Details
Randomization Method
Price randomization was completed by researchers using STATA prior to entering the field and preloaded on Survey CTO to be revealed to respondent (and enumerator) after willingness to pay exercise.
Randomization Unit
Firm owner
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
Information was randomized at the respondent (firm owner) level. There were 569 firm owners in the market identified during our census.
Sample size: planned number of observations
The number of observations varies by outcome (between 1 and 6 post-observations per firm owner).
Sample size (or number of clusters) by treatment arms
This is non-trivial for this project as the random treatment is conditional on willingness to pay.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
New York University Abu Dhabi
IRB Approval Date
IRB Approval Number
Analysis Plan

Analysis Plan Documents

Analysis Plan

MD5: ea2dfbe3b760b0819cbf812362b3c13e

SHA1: c90d093fe8768b630832aeb742ef39f8e60b21f0

Uploaded At: March 28, 2021


Post Trial Information

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Is the intervention completed?
Data Collection Complete
Data Publication

Data Publication

Is public data available?

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials