Working Paper: CEPR ID: DP12910
Authors: Pramila Krishnan; Jan Willem Gunning; Andualem Telaye Mengistu
Abstract: We examine the spatial variation in variety of manufactured goods to study how choice fades with distance. We use data from a purpose-designed survey of shops and consumers in villages in Ethiopia and prices of matched source and destination goods to estimate similar tastes for variety across space. Our estimates suggest that the average mark-up in prices between source and destination is between 10%-15%, while the welfare effects of falling variety average 15% of consumer expenditures on manufactures, but rising as high as 40% across space. We attribute about 44% of the total loss in welfare across space to the loss in variety, with the remainder due to prices.
Keywords: No keywords provided
JEL Codes: R12; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased travel time to the nearest market town (R41) | decrease in the number of varieties available locally (R11) |
| market size (L25) | increase in the number of varieties available (L15) |
| remoteness (R39) | loss of variety (L15) |
| loss of variety (L15) | welfare loss (D69) |