Mobile phones and Mozambique farmers: Less asymmetric information and more trader competition?

Abstract

We measure how the introduction of mobile phones in Mozambique affected unit values of household maize sales, maize producer prices and traders’ margins. Our estimations are based on both representative household surveys for the years 2002, 2003, 2005, 2006 and 2008, and weekly producer and market prices of white maize grain from July 1997 to December 2009 for 15 major producer markets. We find household sales unit values and producer price decreases, and traders’ margin increases between 14% and 22%, indicating benefits for traders. Next, we investigate heterogeneity of impacts in order to explore underlying mechanisms: impacts on margins decrease with population density and network density, and increase with gains from long-distance trade. Impacts on household selling prices are not significantly correlated with educational attainment, but the fall in prices is less with larger household wealth. Impacts on household selling prices and producer prices also become less negative over time, suggesting delayed adoption by farmers. Our results are robust to various threats.