This seminar presents new evidence on how new high-quality trusted competitors affect incumbents’ behaviour in markets rife with information asymmetries.
In rural markets where buyers cannot easily verify agricultural input quality before purchase, retailers may sell degraded or counterfeit products with limited competitive pressure to do otherwise. This paper asks whether the entry of a trusted, high-quality competitor disciplines incumbent behavior. We randomized the timing of branded retail openings by a large agricultural NGO across 100 rural Kenyan markets. Our data come from a combination of a market-wide census of agro-input retailers, firm surveys, and mystery-shopping visits followed by independent lab testing of seed germination and fertilizer quality compliance. Incumbents near an early-phase entrant raise the quality floor on the seed they sell and expand the range of varieties they stock. Fertilizer quality does not respond. Entry and exit also remain unchanged, suggesting incumbents adjust along intensive rather than extensive margins.
Event Speakers
Associate Professor Emilia Tjernstrom
Emilia is a development economist in the Department of Economics at Macquarie Business School. Her research focuses on the drivers and impacts of technology adoption within agriculture, energy, and small firm contexts. Much of her work highlights heterogeneity in decision-making and policy outcomes, with the goal of informing effective policy design.