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Licensed Unlicensed Requires Authentication Published by De Gruyter February 3, 2008

Millers, Commission Agents and Collusion in Grain Markets: Evidence from Basmati Auctions in North India

  • A. Banerji and J.V. Meenakshi

Abstract

This paper undertakes structural estimation of asymmetric auction models in a market for basmati, and detects the presence of a cartel consisting of a large (in market share) local miller and commission agents purchasing for large distant millers. The contracts between the distant millers and their commission agents help to explain the specific form that collusion takes. Simulations indicate that (i) the cartel gains considerably by colluding, over the competitive outcome; (ii) however, sellers (farmers) do not lose significantly under collusion when the commission agents bid. The paper also shows that efficient collusion, the form of collusion commonly assumed in the literature, does not explain the data well.

Published Online: 2008-2-3

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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