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Keywords:

  • D23;
  • O12;
  • Q12;
  • Q13
  • Dual-criteria;
  • Transaction costs;
  • Sales location;
  • Agricultural supply response;
  • Cassava, Benin

Abstract

In much of rural Africa, high transaction costs limit farmers’ market participation and thus their potential for income growth. Transaction costs can affect not only whether a farmer sells product but also whether sales occur at the farm gate or at a market. If production behavior is related to a chosen sales location, then analysis of interventions can be improved by explicit consideration of the decision of where to sell. This article develops a double-selection model that explains consumption and production decisions by semi-subsistence farmers who first decide whether to be a seller and then whether to sell at the farm gate or at an off-farm location before deciding on production and consumption. The study tests the validity of this dual-criteria model against a single-criterion model in which a grower first decides to be a seller and then decides production, consumption, and sales location simultaneously. The results suggest that the dual-criteria model provides more information than the single-criterion model using a sample of cassava producer in Benin.