Abstract:-
It is well established that competitive markets are more efficient and yield higher farm harvest prices. But does it influence the choice of marketing channel? Do regions with higher market competition have a higher likelihood of sale in formal market channels? In this paper, we explore the role of market competition in determining choice of marketing channels in the context of Indian agriculture. We find that farmers sell more to apmc mandis and government markets when market competition in the district is higher. However, this relationship is driven by msp crops and state procurement. With higher market competition, farmers producing non-msp crops sell more to other buyers. We further find that state procurement reinforces the dominance of apmc mandis and government markets. Our results show that market competition does influence marketing channel choices but through Government policies.