Socio-economic analysis of farmers facing asymmetric information in inputs markets: evidence from the rainfed zone of Pakistan

• Published in: Technology in society Vol. 63; p. 101405
• Main Authors: Ullah, Ayat, Arshad, Muhammad, Kächele, Harald, Zeb, Alam, Mahmood, Nasir, Müller, Klaus
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01.11.2020; Elsevier Science Ltd
• Subjects: Adoption of innovations; Agricultural economics; Agricultural management; Agricultural research; Agricultural technology; Agriculture; Agrochemicals; Asymmetric information; Asymmetry; Complexity; Economic analysis; Exaggerated prices and low quality; Farmers; Farmers' socio-economic attributes; Fertilizers; Heterogeneity; Higher education; Households; Information asymmetry; Information sources; Input market; Logit models; Markets; Non-adoption; Pesticides; Physical education; Prices; Pricing; Regulation; Seeds; Socioeconomic factors; Technology; Technology utilization; Pakistan; Non-adoption; Input market; Information asymmetry; Exaggerated prices and low quality; Farmers' socio-economic attributes
• ISSN: 0160-791X; 1879-3274
• DOI: 10.1016/j.techsoc.2020.101405

Information asymmetry plays an important role in the non-adoption of modern agricultural inputs like improved seeds, pesticides and fertilizers etc. Therefore, this study investigated the role of farmers’ socio-economic attributes and farm level characteristics in avoiding asymmetry of information in agricultural input markets (i.e. exaggerated prices and low quality). The approach captures the farm level heterogeneity and complexity that may help the authorities in strengthening existing market regulations to control price and quality disparities. We analysed 395 randomly selected farm households using multinomial logit model. We found that farmers with large landholding size are less likely to face quality and more likely to face price information asymmetry. Farmers with higher education, more physical assets and better access to other sources of information are less likely to face both quality and price information asymmetry. Borrowers as compared to purchasers are more likely to face information asymmetry on prices of agricultural inputs. Non-adopters of improved agricultural technologies are more suspicious of information asymmetry than adopters. The paper thus provides evidence that the socio-economic dynamics of information asymmetry can have an important influence on wide spread adoption of technology. Paying more attention to farm level heterogeneity and complexity would help to develop general market management plan and improve the adoption of technology by farmers. •This paper presents socio-economic analysis of farmers' facing information asymmetry in input markets and its effect on adoption of agricultural technologies in rural Khyber Pakhtunkhwa (KP), Pakistan.•The socio-economic dynamics of information asymmetry can have an important influence on wide spread adoption of technology.•The study recommends that paying more attention to farm level heterogeneity and complexity would help to develop general market management plan and improve the adoption of technology by farmers.