Price Information, Inter-village Networks, and “bargaining Spillovers”: Experimental Evidence from Ghana

Nicole Hildebrandt (Boston Consulting Group)
Yaw Nyarko (New York University)
Giorgia Romagnoli (University of Amsterdam)
Emilia Soldani (Goethe University Frankfurt)

Abstract: Via a randomized experiment paired with a novel index of inter-village communication net- works, we identify the impact of providing rural farmers with commodity price information delivered via text messages on their mobile phones. The intervention affected prices received by farmers in two ways: (1) a long-lasting increase of about 9% for treatment group farmers, and (2) substantial indirect benefits for certain control group farmers, which do not seem to be driven by classical informational spillovers. We discuss a novel mechanism of bargaining spillovers which can explain the rise of such positive externalities, even in the absence of information sharing between the treatment and control groups. Our results highlight the importance of accounting for longer-run spillovers. The direct return on investment of the service (over 200%) underscores the huge potential of ICT interventions in emerging markets.