Journal
FOOD POLICY
Volume 47, Issue -, Pages 1-12Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.foodpol.2014.04.009
Keywords
Fertilizer subsidy; Parallel markets; Crowding out; Sample selection; Double-hurdle model; Nigeria
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We examine how the previous fertilizer subsidy program in Nigeria (FMSP) affected the demand for commercial fertilizer. We apply an endogenous double hurdle model to a pseudo-panel and cross-section data of farm households. The methodology accounts for potential endogeneity of commercial fertilizer price with subsidy. Our specification is also appropriate where few farmers report the use of both subsidized and commercial fertilizer. We find that 100 kg of subsidized fertilizer supplied to a farm household reduced the probability of its participation into commercial fertilizer market by 10-21% points, while not affecting fertilizer use upon participation. (C) 2014 Elsevier Ltd. All rights reserved.
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