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The Potency of Quality Incentives: Evidence from the Indonesian Dairy Value Chain
Author(s) -
Treurniet Mark
Publication year - 2021
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/ajae.12176
Subject(s) - incentive , quality (philosophy) , business , value (mathematics) , matching (statistics) , indonesian , agricultural science , marketing , environmental economics , economics , microeconomics , computer science , statistics , machine learning , philosophy , linguistics , environmental science , mathematics , epistemology
Misalignment of quality incentives along value chains may limit quality and therefore function as a barrier to smallholder participation in modern value chains. This article uses survey and administrative data to study how individual quality incentives provided by private actors can help smallholders to improve milk quality. By matching farmers on baseline characteristics, I find that individual quality incentives increased the compositional quality of milk quickly after its introduction. Together with physical inputs and training, individual quality incentives also increased the hygienic quality of milk. Decreasing hygienic quality over time by treated farmers suggests that the impact of the intervention decreased over time.