Randomizing competition
A market-level field experiment of store entry in rural markets to shed light on how competition affects product quality
Market-level effects of competition: prices, quality, and mechanisms
Project overview
Conventional wisdom has it that market competition drives down prices. The effect of competition on product quality, however, is ambiguous. This project uses a market-level experiment to identify the causal effect of market entry on agricultural input markets. We randomize the roll-out of new agricultural retail stores in rural Kenya, where agricultural input markets are served by small-scale retail shops with spatial monopoly power. We use this experimental variation in competitive pressure to estimate the effect on prices, product quality, and firm behavior including entry and exit decisions.
Research team
Collaborators on this project include
- Josh Deutschmann (University of Chicago)
- Felipe Parra (PhD student at UW-Madison)
- Jeremy Foltz (UW-Madison)
- Tim Njagi (Tegemeo Institute)
Funding
This project has received support from PEDL and the National Science Foundation