Product Conflation and Marketplace Design: Evidence from Ethiopia’s Commodity Exchange

Abstract: In this ongoing project I explore the impact on market participants on changing “product” definition rules on a financial platform in a developing. Specifically, I examine the equilibrium effects on sellers and buyers when a “products” definition is de-conflated. In my context, a trading platform changed interactions between agricultural producers and buyers in the trading of coffee. The arrival of the trading platform by design made buyer-seller transactions anonymous. While an exchange solves the search and contracting frictions, at the same time it gives rise to a new set of issues for commodities whose precise quality and supplier origin matters to buyers. The commoditization (conflation) meant traceability in the supply chain evaporated. These rules of trading lasted for a decade and recently have been changed, I am interested in understanding this reform.