Market competition and discrimination

This paper studies the effect of competition on ethnic discrimination by carrying out a field experiment in the context of the rice market in Bangladesh. We recruit professional rice buyers (middlemen) to act as judges in a rice competition by providing a quality rating and a price quote for rice samples that we randomly associate with farmers bearing ethnic majority or minority names. First, we find that there is no ethnic difference in buyers’ evaluation of rice quality. Second, we find that local buyers, who have local monopsony power, discriminate against ethnic minority farmers by quoting a lower price for their rice relative to that of ethnic majority farmers. Third, we find that wholesale buyers, who face fierce competition in the marketplace, do not price discriminate against ethnic minority farmers. A second lab-in-the-field experiment and survey information indicate that both local and wholesale buyers are prejudiced against ethnic minority farmers. This suggests that market competition can eliminate the discrimination of wholesale buyers.

Bangladesh, Discrimination, Ethnicity, Field experiments, Market competition, Rice market

10.1016/j.euroecorev.2022.104361

0014-2921

Siddique, Abu B.

8d380963-063b-4ffe-ac86-a37e452c0f5d

Vlassopoulos, Michael

2d557227-958c-4855-92a8-b74b398f95c7

Zenou, Yves

38bf0c72-462b-4c08-8fd1-ce365b0296dc

February 2023

Siddique, Abu B.

8d380963-063b-4ffe-ac86-a37e452c0f5d

Vlassopoulos, Michael

2d557227-958c-4855-92a8-b74b398f95c7

Zenou, Yves

38bf0c72-462b-4c08-8fd1-ce365b0296dc

Siddique, Abu B., Vlassopoulos, Michael and Zenou, Yves (2023) Market competition and discrimination. European Economic Review, 152, [104361]. (doi:10.1016/j.euroecorev.2022.104361).

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Accepted/In Press date: 6 December 2022

e-pub ahead of print date: 2 January 2023

Published date: February 2023

Additional Information: Funding Information: We are grateful to the editor, two anonymous referees, Abigail Barr, Renaud Foucart, Thomas Gall, Sebastian Goerg, Yuki Takahashi, and workshop participants at Bologna, Ifo Institute, Southampton, and Technical University of Munich for many thoughtful comments and discussions. We thank Ashrai (NGO) and Masudur Rahman for their help and support. We also thank Mir Sabbir Islam, Khadeza Sultana Sonia, Tahmid Hasan, and Nazmul Sakib for excellent research assistance. This work has received ethics approval from the University of Southampton (reference no. 31856) and financial support from the ESRC (UK) . Funding Information: We are grateful to the editor, two anonymous referees, Abigail Barr, Renaud Foucart, Thomas Gall, Sebastian Goerg, Yuki Takahashi, and workshop participants at Bologna, Ifo Institute, Southampton, and Technical University of Munich for many thoughtful comments and discussions. We thank Ashrai (NGO) and Masudur Rahman for their help and support. We also thank Mir Sabbir Islam, Khadeza Sultana Sonia, Tahmid Hasan, and Nazmul Sakib for excellent research assistance. This work has received ethics approval from the University of Southampton (reference no. 31856) and financial support from the ESRC (UK). Publisher Copyright: © 2022 Elsevier B.V.

Keywords: Bangladesh, Discrimination, Ethnicity, Field experiments, Market competition, Rice market