Market day coordination, market size, and rural development
Market days are the pulse of life in many parts of the world and millions of people rely for their daily sustenance on weekly markets.
Abstract
Market days are the pulse of rural, economic and social life in many parts of the world and millions of people rely for their daily sustenance on weekly markets. They are also a complex coordination problem between sellers and buyers that determines who participates where and when in market exchange. The author studies the role of this long standing institution in shaping agglomeration and present-day local trade patterns. The study identifies a natural experiment in Western Kenya in which market schedules over the past century were set quasi-randomly, inducing exogenous variation in markets competing over participants with their neighbours on the same day of the week. It finds that market schedule coordination causally and lastingly affected market attendance, driven by cross-attendance from other villages, as well as present day population and night time luminosity as a proxy for economic activity.
This is an output of the Structural Transformation and Economic Growth (STEG) programme.
Citation
Poll M. ‘Market day coordination, market size, and rural development’ Structural Transformation and Economic Growth (STEG) Working Paper Series, WP083, 2024