Impact of Cell Phones on Grain Markets in Niger

An interesting job market paper from a UC-Berkeley Ph.D. candidate Jenny Aker, "Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger."

Abstract: Due partly to costly information, price dispersion across markets is common in developed and developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders.

The results provide evidence that cell phones reduce grain price dispersion across markets by a minimum of 6.4% and reduce intra-annual price variation by 10%. The primary mechanism by which cell phones affect market-level outcomes appears to be a reduction in search costs, as grain traders operating in markets with cell phone coverage search over a greater number of markets and sell in more markets. The results suggest that cell phones improved consumer and trader welfare in Niger, perhaps averting an even worse outcome during the 2005 food crisis.

Conclusion: Information technology is often considered to be a low priority when compared to other basic needs, such as food, water, shelter and health care . While basic needs cannot or should not be overlooked, cell phones could be a powerful development tool for farmers, traders and consumers.

Read a summary of the paper here.