Structure and entry barriers to access groundnut markets for intermediary traders in central and northern Malawi

ABSTRACT

Traders that participate in more competitive market structures earn relatively little marketing margins than those that participate in less competitive ones. For better returns, commodity producers have to transact in competitive market structures. Therefore, understanding market structures and market entry barriers are essential to inform policy. The study's objectives were to examine forms of market structure and investigate entry barriers into the local, district, and city groundnut markets for intermediary traders in central and northern Malawi. The findings revealed that the three markets were relatively competitive. Other results showed that business experience and sole ownership of business increased the traders’ likelihood to enter the district and local markets, respectively. Market transaction costs and storage infrastructure negatively and positively influenced the probability of traders’ entry into the local and city markets, respectively. The quantity of produce transacted increased and decreased the likelihood of entry into the local and city markets. Access to credit and informal credit sources increased and decreased the likelihood of entering the city market, respectively. Membership to informal trader associations increased the probability of entering the city market. Thus, institutions, markets and road infrastructure are critical to enhancing intermediary traders’ participation in the local and city groundnut markets.

KEYWORDS:

• Competitive structure
• market transaction
• entry barriers
• groundnuts

JEL CLASSIFICATION:

• C31
• D22
• D41
• D42

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

This work was supported by Agricultural Productivity Program for Southern Africa (APPSA- Malawi) under the World Bank Project: [Grant Number Project ID: P094183].