The impact of cellphones on the price of grain in Niger

On the plane from Amsterdam to Kuala Lumpur I caught up on some more reading, this time a paper by a Berkeley economist,  Jenny C. Aker,  "Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger" (January 15, 2008).

Long time readers may recall my post about Robert Jensen's 2006 study of the advent of cellphones in the Indian state of Kerala and the positive impact they had on fish markets.  Aker's study doesn't have the beautiful graphs that Jensen provided, but the quantitative results are similar.

Due partly to costly information, price dispersion across markets is common in developed and developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders and other market actors.  ...we use a unique market and trader dataset from Niger that combines data on prices, transport costs, rainfall and grain production with cell phone access and trader behavior.

The results provide evidence that cell phones reduce grain price dispersion across markets by a minimum of 6.4 percent and reduce intra-annual price variation by 10 percent. Cell phones have a greater impact on price dispersion for market pairs that are farther away, and for those with lower road quality. This effect becomes larger as a higher percentage of markets have cell phone coverage.

Niger is a landlocked country in western Africa.  It's extremely poor and most of the population are subsistence farmers.  Among the interesting conclusions of this study is the introduction of cellphones produced the equivalent of a 3% to 8% decrease in the price of grain together with an increase in grain traders income.

Particularly notable was the largest differential (8%) occurred during a food crisis in 2005 when people with access to cell phones fared better than those without.

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