Quality and Contracting in Agricultural Supply Chains
Low product quality - or inability to credibly signal high quality - may be a hindrance to firm growth and exporting in developing countries. In this project, we study how incentives for quality upgrading are passed along supply chains, and how firms' ability to measure and contract over quality interacts with the regulatory environment and public services. In partnership with the Agricultural Transformation Agency and a World Bank-funded capacity building program at the National Quality Infrastructure agencies in Ethiopia, we conduct an RCT that adjusts the costs of product quality testing at several points along the supply chain for honey. We investigate how reductions in the costs of quality verification at multiple points interact with one another and with the structure and degree of competition along the chain. The results are important for understanding how public services influence firm-to-firm contracting and how the structure of supply chains affect developing countries' comparative advantage in international markets.
Bill and Melinda Gates Foundation
Funding Period: 7/1/2019 to 6/30/2022