Buyer collusion and efficiency of government intervention in wheat markets in northern India: an asymmetric structural auctions analysis

• Published in: American journal of agricultural economics Vol. 86; no. 1; pp. 236 - 253
• Main Authors: Banerji, A., Meenakshi, J.V.
• Format: Journal Article
• Language: English
• Published: Malden Oxford University Press 01-02-2004; American Agricultural Economics Association; Blackwell Publishing Ltd
• Subjects: Agricultural economics; agricultural subsidies; Agriculture; Asymmetry; Auction markets; Auctions; buyer asymmetry; Cartels; Collusion; Consumer behavior; D440; Developing countries; Economic efficiency; Economics; Efficiency; Government; Government policy; Government purchasing; Grains; India; Intervention; Interventionism; LDCs; Market; Market prices; markets; Maximum likelihood estimation; O130; Procurement; Purchasing; Q110; Q130; structural auctions; Uniformity; Wheat; wheat markets; wholesale marketing; India; wheat markets; collusion; D440; Q130; structural auctions; Q110; O130; buyer asymmetry
• ISSN: 0002-9092; 1467-8276
• DOI: 10.1111/j.0092-5853.2004.00575.x

This article uses auction theory to analyze wholesale markets for wheat in Northern India. This approach enables us to characterize the market in terms of buyer asymmetries, to detect the existence of collusion, and to quantify its impact on market prices. We show that buyer asymmetries exacerbate the downward impact of collusion on prices. The article also considers whether the government paid too much for the wheat it procured at the minimum support price, and shows that for our sample it did not. The article is based on a primary survey of two wholesale markets in North India.