Is the local wheat market a ‘market for lemons’? Certifying the supply of individual wheat farmers in Ethiopia

2021 ◽  
Author(s):  
Banawe Plambou Anissa ◽  
Gashaw Abate ◽  
Tanguy Bernard ◽  
Erwin Bulte
Keyword(s):  
Asymmetric Information ◽  
Willingness To Pay ◽  
Wheat Quality ◽  
High Quality ◽  
Auction Design ◽  
Market For Lemons ◽  
Wheat Market ◽  
Ex Ante

Abstract Bulking and mixing of smallholder supply dilutes incentives to supply high quality. We introduce wheat ‘grading and certification shops’ in Ethiopia and use an auction design to gauge willingness-to-pay (WTP) for certification. Bids correlate positively with wheat quality, and ex ante notification of the opportunity of certification improves wheat quality. These findings suggest that local wheat markets resemble a ‘market for lemons’, crippled by asymmetric information. However, aggregate WTP for grading and certification services does not re-coup the sum of fixed, flow and variable costs associated with running a single certification shop.

scholarly journals Selling with evidence

2019 ◽  
Vol 14 (2) ◽  
pp. 345-371
Author(s):  
Frédéric Koessler ◽  
Vasiliki Skreta
Keyword(s):  
Asymmetric Information ◽  
Product Quality ◽  
Optimal Allocation ◽  
Pareto Optimal ◽  
Principal Problem ◽  
Equilibrium Allocation ◽  
Interdependent Values ◽  
Ex Ante ◽  
Private Value ◽  
Posted Price

We study the informed‐principal problem in a bilateral asymmetric information trading setting with interdependent values and quasi‐linear utilities. The informed seller proposes a mechanism and voluntarily certifies information about the good's characteristics. When the set of certifiable statements is sufficiently rich, we show that there is an ex ante profit‐maximizing selling procedure that is an equilibrium of the mechanism proposal game. In contrast to posted price settings, the allocation obtained when product characteristics are commonly known (the unravelling outcome) may not be an equilibrium allocation, even when all buyer types agree on the ranking of product quality. Our analysis relies on the concept of strong Pareto optimal allocation, which was originally introduced by Maskin and Tirole (1990) in private value environments.

scholarly journals Existence of an interim and ex-ante minimax point for an asymmetric information game

2010 ◽  
Vol 108 (1) ◽  
pp. 4-6
Author(s):  
Marialaura Pesce ◽  
Nicholas C. Yannelis
Keyword(s):  
Asymmetric Information ◽  
Ex Ante ◽  
Minimax Point

scholarly journals Measuring Ex Ante Welfare in Insurance Markets

2020 ◽  
Author(s):  
Nathaniel Hendren
Keyword(s):  
Willingness To Pay ◽  
Expected Utility ◽  
Low Income ◽  
Reduced Form ◽  
Cost Curve ◽  
Optimal Insurance ◽  
Percentage Difference ◽  
Ex Ante ◽  
Information Sets ◽  
Market Surplus

Abstract The willingness to pay for insurance captures the value of insurance against only the risk that remains when choices are observed. This article develops tools to measure the ex ante expected utility impact of insurance subsidies and mandates when choices are observed after some insurable information is revealed. The approach retains the transparency of using reduced-form willingness to pay and cost curves, but it adds one additional sufficient statistic: the percentage difference in marginal utilities between insured and uninsured. I provide an approach to estimate this additional statistic that uses only the reduced-form willingness to pay curve, combined with a measure of risk aversion. I compare the approach to structural approaches that require fully specifying the choice environment and information sets of individuals. I apply the approach using existing willingness to pay and cost curve estimates from the low-income health insurance exchange in Massachusetts. Ex ante optimal insurance prices are roughly 30% lower than prices that maximize observed market surplus. While mandates reduce market surplus, the results suggest they would actually increase ex ante expected utility.

scholarly journals Measuring the end-of-life premium in cancer using individual ex ante willingness to pay

2017 ◽  
Vol 19 (6) ◽  
pp. 807-820 ◽  
Author(s):  
S. Olofsson ◽  
U.-G. Gerdtham ◽  
L. Hultkrantz ◽  
U. Persson
Keyword(s):  
Willingness To Pay ◽  
End Of Life ◽  
Ex Ante

Optimal Reimbursement Policy in Health Care: Competition, Ownership Structure and Quality Provision

2018 ◽  
Vol 18 (1) ◽  
Author(s):  
Rune Stenbacka ◽  
Mihkel Tombak
Keyword(s):  
Health Care ◽  
Willingness To Pay ◽  
Ownership Structure ◽  
Reimbursement Policy ◽  
Healthcare Industry ◽  
Reimbursement Rate ◽  
High Quality ◽  
For Profit ◽  
Market Coverage ◽  
Quality Provision

AbstractWe analytically characterize the effects of ownership and competition in the healthcare industry on quality provision, market coverage and optimal reimbursement policy. A for-profit monopoly selects a lower quality than a nonprofit supplier, and the socially optimal reimbursement rate with a nonprofit monopoly exceeds that with a for-profit monopoly. We establish that the optimal repayment policy is invariant to the introduction of competition by a for-profit high-quality supplier. Thus, market coverage is invariant to the introduction of competition, whereas consumers with a higher willingness to pay for quality are better off with competition.

S-shape relationship between customer satisfaction and willingness to pay premium prices for high quality cured pork products in Spain

Meat Science ◽  
2012 ◽  
Vol 90 (3) ◽  
pp. 814-818 ◽  
Author(s):  
Alejandro Cotes-Torres ◽  
Pablo A. Muñoz-Gallego ◽  
José Miguel Cotes-Torres
Keyword(s):  
Customer Satisfaction ◽  
Willingness To Pay ◽  
High Quality ◽  
Pork Products
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