A Selectivity Model of Household Food Marketing Behavior in Sub‐Saharan Africa

Abstract

Abstract The agricultural household's discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy, conditional on participation. Failure to participate in markets results from high fixed transactions costs. A selectivity model endogenously switches households into alternative market participation states, correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions. Improved market information increases the probability of participation by sellers, while access to cereals‐processing technology increases quantities transacted by both sellers and buyers, conditional on participation.