International Economics Commons^™

Cartels In An "Nth-Best" World: The Wholesale Foodstuff Trade In Ibadan, Nigeria, Harlan M. Smith Ii, Margaret E. Luttrell

Economics Faculty Research

The purpose of this paper is to develop an understanding of the economic functions and associated welfare implications of the cooperative associations that dominate the wholesale trade in two staple foods. Questionnaire responses lead to several conclusions. Individual traders face incomplete markets, imperfect information, and little government-provided institutional and physical infrastructure. The associations are sophisticated "Coase-like" responses to this market environment: they focus on reducing their members' transaction costs, and hence the marginal private costs of trading. Thus it is likely that these associations enhance efficiency. We conclude with a critique of current government policy with respect to this trade.