Price and Nonprice Information Frictions in Regional Arbitrage

The Case of Rice Traders in Antananarivo, Madagascar

Bibliographic Data

ID4361996
AuthorsYutaka Arimoto (0000-0002-6505-4128, Hitotsubashi University), Hisaki Kono (0000-0002-6375-1456, Kyoto University), Tsilavo Ralandison (0000-0002-4062-1042, Kyoto University), Takeshi Sakurai (0000-0002-7989-8882), Kazushi Takahashi (0000-0003-2904-6080, Sophia University)
Year2019
Volume67
Issue2
Pages273-313
Publication date2019-01-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueEconomic Development and Cultural Change (JOURNAL)
Journal identifiersISSN: 0013-0079 • E-ISSN: 1539-2988
PublisherUniversity of Chicago Press (PUBLISHER • US)
DOI10.1086/698163
OpenAlexW2794678740
LanguageEN
Citations received2
References cited30

Traders’ arbitrage is crucial for regional market integration. We investigate the patterns of regional arbitrage of rice traders in Antananarivo, Madagascar. On the basis of a trader-level biweekly survey, we find that most traders do not buy rice at the lowest price including observed transportation costs. Random provision of regional price information, intended to reduce search costs, did not improve arbitrage performance. Traders continue trading with districts that they are used to because they worry about quality uncertainty and the trustworthiness of new partners. These findings suggest that nonprice information frictions are important obstacles of regional arbitrage and market integration

Arbitrage · Business · Economics · Financial economics · Quality (philosophy) · Trustworthiness · Economic Growth and Development · Firm Innovation and Growth · Global trade and economics