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"You Quit?" Influence of Neighbor Experience and Exit on Small Farmer Market Participation

Michelson, Hope (2015): "You Quit?" Influence of Neighbor Experience and Exit on Small Farmer Market Participation.

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Abstract

This research analyzes the relationship between a farmers' participation in Nicaraguan supermarket supply chains and the market entries and exit of neighboring farmers. Drawing on insights from the technology adoption literature on learning and experimentation, we incorporate measures of neighbor experience into a model of a farmer's decision to join or quit these markets. We also test for strategic delay by small farmers and estimate the price that some farmers may pay for experimentation.

Our results suggest both that that neighbors' exits negatively influence a farmer's own decision to join the supply chain and that some farmers engage in strategic delay. Early adopters bear costs of their neighbors' "free riding" in the form of higher product rejection rates and lower annual transactions with supermarkets. Evidence of strategic delay on the part of farmers suggests a social process rather than a firm-level roll out of new contracts within a given village.

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