STEG Working Paper Series Research Theme 0: Data, Measurement, and Conceptual Framing, Research Theme 3: Agricultural Productivity and Sectoral Gaps, Research Theme 4: Trade and Spatial Frictions, Research Theme 5: Political Economy and Public Investment

Market Day Coordination, Market Size, and Rural Development

WP083_Poll_MarketDayCoordination,MarketSize,andRuralDevelopment.pdf

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WP083_KenyanMarket

Market days are the pulse of rural, economic and social life in many parts of the world and millions of people rely for their daily sustenance on weekly markets. They are also a complex coordination problem between sellers and buyers that determines who participates where and when in market exchange. I study the role of this long-standing institution in shaping agglomeration and present-day local trade patterns. I identify a natural experiment in Western Kenya in which market schedules over the past century were set quasi-randomly, inducing exogenous variation in markets competing over participants with their neighbours on the same day of the week. I find that market schedule coordination causally and lastingly affected market attendance, driven by cross-attendance from other villages, as well as present day population and night time luminosity as a proxy for economic activity.

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