MSU Agricultural, Food, and Resource Economics
The specific objectives of the study are (a) to measure transfer costs by market circuit; (b) to assess market integration along these circuits; c) to identify links between transfer costs and marketing margins; and (d) to draw the implications of domestic market integration for regional trade flows.
The methodology used in this study is (a) application of a Situation-Structure-Performance paradigm to discrete markets; (b) decomposition of transfer costs and comparison to spatial margins; and c) econometric analysis based on a spatial equilibrium model, linking margins, costs, and flows along chosen circuits.
The descriptive analysis revealed that supply and demand, the quality and distance of transport links, the competitiveness of traders, and seasonal trends affect the relationship between spatial margins and transfer costs. Only two market circuits exhibit non-equilibrium conditions.
In the cost analysis, transport represented 72% of total costs for vehicle owners and non-owners, indicating that rental rates reflect real transport costs. Market coordination costs are high, representing 23% of total costs for vehicle owners while fixed costs are less than 30%.
The econometric analysis, simultaneously modeling margins, costs, and flows indicated that margins and flows are positively related; costs have an important impact on margins; costs are subject to significant economies of distance and only slight economies of size; and that margins are influenced upward in the harvest and downward in the post-harvest season.
The extension of these results for Mali's trade patterns are threefold. First, the field work reveals that Mali's regional exports are not only a border phenomenon, but link interior production zones. Secondly, the axis with important flows to Mauritania has net margins close to zero, while the axis with little flows to Senegal has high net margins. Third, the discrepancy between officially registered exports and observed flows to Mauritania lead to questions of why these clandestine operations persist despite export liberalization policy at the national level.