Competition in Kenyan Markets and Its Impact on Income and Poverty : A Case Study on Sugar and Maize
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World Bank Group, Washington, DC
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This paper investigates the link between
competitive, well-functioning food markets and consumer
welfare. The paper explores two key food markets in Kenya --
sugar and maize -- and argues that a variety of factors
conspire to distort market prices upward. Distortionary
factors include import tariff policy, nontariff barriers,
potential anticompetitive conduct by firms, and direct state
intervention in markets. Changes in sugar and maize prices
are shown to have significant welfare effects on consumers.
Equivalent income effects are estimated using the most
recent available representative household survey data -- the
Kenya Integrated Household Budget Survey 2005/06. The paper
shows that relaxing trade barriers to allow sugar prices to
fall by 20 percent could reduce poverty by 1.5 percent.
Similarly, adjusting government interventions in the maize
market, which have been shown to inflate maize prices by 20
percent on average, could reduce poverty by 1.8 percent. The
magnitude of the estimated income effects may vary based on
updated household-level consumption data, assumptions
regarding demand elasticities, and estimates of import
parity prices for these staples. However, in all the
scenarios, more competitive prices have a larger average
effect on the poorest households in urban and rural areas,
supporting the relevance of effective competition policies
for poverty reduction strategies.
Palabras clave
AGRICULTURE, AVERAGE ANNUAL HOUSEHOLD CONSUMPTION, AVERAGE PRICES, BARRIERS TO COMPETITION, BARS, BEET SUGAR, BENCHMARK, BENCHMARKS, BORDER PRICE, CANE SUGAR, CARTEL, CEREALS, CHANGES IN PRICES, CLIMATE, COCOA, COLLUSION, COMMODITY, COMMODITY MARKETS, COMMON MARKET, COMPETITION POLICIES, COMPETITION POLICY, COMPETITIVE MARKET, COMPETITIVE MARKETS, COMPETITIVE PRICES, COMPETITIVENESS, CONSUMERS, CONSUMPTION INCREASES, CONSUMPTION LEVELS, CONSUMPTION PATTERNS, CROSS PRICE, DEVELOPMENT POLICY, DISPOSABLE INCOME, DOMESTIC MARKET, DOMESTIC PRICES, DOMESTIC PRODUCTION, ECONOMIES OF SCALE, ELASTICITY, ELASTICITY OF SUBSTITUTION, EXCESS DEMAND, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, EXPORTS, FAIR, FINANCIAL CRISIS, FINISHED PRODUCT, FINISHED PRODUCTS, FIXED COSTS, FIXED RATE, FLOUR, FOOD MARKETS, FOOD PRICES, FOREIGN COMPETITION, FREE TRADE, FUTURES, GOVERNMENT INTERVENTION, GOVERNMENT INTERVENTIONS, GOVERNMENT INVOLVEMENT, GOVERNMENT OWNERSHIP, GROWTH POTENTIAL, HOUSEHOLD BEHAVIOR, IMPORT QUOTAS, IMPORTS, INCOME, INCOME DISTRIBUTION, INCOME EFFECT, INCOME EFFECTS, INCOME GROUPS, INCOME HOUSEHOLDS, INCOME LEVELS, INCOMES, INFLATION, INTERNATIONAL COMPETITION, INTERNATIONAL MARKET, INVESTMENT CLIMATE, LIBERALIZATION, LOWER INCOME HOUSEHOLDS, LOWER PRICES, MAIZE, MARKET ENTRY, MARKET PRICES, MARKET SHARE, MARKET STRUCTURE, MEAL, MILLS, MONETARY FUND, MONOPOLIES, MONOPOLY, PACKAGING, PER CAPITA CONSUMPTION, PORRIDGE, PREFERENTIAL ACCESS, PREMIUM PRICE, PRICE CHANGE, PRICE CHANGES, PRICE COMPETITION, PRICE DECREASE, PRICE DECREASES, PRICE ELASTICITY, PRICE ELASTICITY OF DEMAND, PRICE FIXING, PRICE FLUCTUATIONS, PRICE INCREASE, PRICE INCREASES, PRICE SERIES, PRICE SETTING, PRICE VARIATION, PRICING PRACTICES, PRIVATIZATION, PRODUCTIVITY INCREASES, PURCHASING, REAL INCOME, REGIONAL TRADE, REGULATOR, RETAIL, RETAIL MARKET, RETAIL PRICE, RETAIL PRICES, SALE, SALES, SCENARIOS, STOCKS, SUBSTITUTE, SUBSTITUTION, SUCROSE, SUGAR, SUGAR CANE, SUGAR FACTORIES, SUGAR INDUSTRY, SUPPLIERS, SUPPLY SIDE, TARIFF BARRIERS, TAX, TOTAL CONSUMPTION, TRADE BARRIERS, TRADE POLICIES, TRADE POLICY, UNCERTAINTIES, VALUE ADDED, VITAMINS, VOLATILITY, WELFARE ANALYSIS, WHEAT, WHOLESALE MARKET, WHOLESALE PRICES, WHOLESALERS, WORLD MARKET, WORST-CASE