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Smallholder Banana Marketing In Southern Ethiopia: A Transaction Cost Economics Perspective


Problems such as high transaction costs, poor roads, information asymmetry, and other market imperfections are detrimental for smallholders' market integration. High transaction costs, particularly, are major obstacles for smallholder market integration. Transaction costs in the form of information and search, bargaining and negotiation, as well as monitoring and enforcement costs are likely to influence smallholders' marketing behavior. This study hypothesizes that the level of income generated from banana sales in southern Ethiopia is strongly influenced by transaction costs. Regression analysis shows that the depth of marketing is significantly influenced by transaction costs. Results from two stages least square estimation (2SLS) show that the level of income generated from selling banana is indeed determined by the depth of marketing. The implication of the finding is that households with lower transaction costs are expected to generate higher income from banana. Hence, investments in public goods such as roads, telecommunications and appropriate institutions, as well as farmer support services in terms of input supply and marketing information, may enhance farm income by and in turn improve the livelihood of the rural poor.

Corporate Author: 
Getnet Alemun & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Ethiopian Economic Association (EEA)
Primary Descriptors: 

transaction costs

Secondary Descriptor: 


Geographic Descriptors: 
Ethiopia, Southe
Cataloge Date: 
Broad Subject heading: 
Agricultural development - market integration
Call Number: 
330.963 PRO 2010
Serial Key Title: 
Proceedings of the Seventh International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Publication date: 
2013-05-27 23:10:00
Forum or Discussion date: 
2013-02-27 15:43:05
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Current frequency: