Willingness to trade and market functionality as predictors of supply expandability in conditions of food insecurity

Abstract

ABSTRACTThis study proposes an analytical approach to support the selection of intervention strategy in response to conditions of food insecurity. This is done by assessing the functionality of the local market providing particular attention to the simulation of supply response. The consideration that price changes can play a major role in raising the trader’s entrepreneurial attitude raises the question whether a price rise is required before trader’s action can be expected. At the same time, the consideration that such a decision is not merely the result of price changes, but involves other contextual factors, as faced or perceived by the trader, highlights the need for a system capable of combining and analyzing information on these contextual factors. Results of the analysis stress the relevance of local market structure and functionality as predictors of the inflationary consequences of a cash injection. This leads to a proposal for a simple way to generate quick and rough estimates of expected price changes, which can turn out particularly useful when the feasibility of field data collection is severely constrained.

Keywords

• Market structure
• market functionality
• cash transfers
• food insecurity
• food assistance
• willingness to trade