Browsing by Subject "Market failure"

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An analysis of institutional arrangements for providing animal health services : a theoretical framework and empirical evidence from Kenya and Uganda
(2015) Ilukor, John; Birner, Regina
Providing adequate animal health services to smallholder farmers in developing countries has remained a challenge, in spite of various reform efforts during the past decades, mainly because of governance challenges. Although good governance has been recognized as an important element in addressing emerging and re-emerging animal disease threats, animal health research has paid limited attention to the governance challenges inherent in the provision of animal health services. The existing frameworks for analyzing animal health services have mainly focused on market failures to decide what the public sector, private sector, and “third sector” (the community-based sector) should do with regard to providing animal health services. This thesis uses transaction cost economics to analyze institutional arrangements for providing animal health services since it captures both market failures and governance attributes. The objective of this thesis is threefold: (1) to develop a conceptual framework for analyzing animal health services using transaction cost theory of economic organization and to provide empirical evidence on its application using data collected on clinical veterinary services in Uganda and Kenya; (2) to identify governance challenges in the provision of animal health services and possible remedies to address them using a case study of Uganda; (3) to examine the quality of services provided by different service providers (paraprofessionals and veterinarians) and to gain insights into paraprofessional-veterinarian relations. This thesis is comprised of six chapters. The introductory chapter provides background information regarding the study areas in Uganda and Kenya, highlights the importance of strengthening and supporting the provision of veterinary services in developing countries, and presents the main research objectives and outline of the thesis. Chapter 2 presents a conceptual framework for analyzing institutional arrangements for providing veterinary services using Williamson’s discriminating alignment hypothesis and generates testable hypotheses regarding the cost effectiveness of various institutional arrangements. Using household survey data collected in Uganda and Kenya on clinical services, empirical tests of these hypotheses are presented. Chapter 3 examines the process of animal service delivery as well as identifies the main influential actors, important social relations, and main governance challenges encountered in the provision of clinical and preventive veterinary services in pastoral and intensive livestock productions systems in Uganda. Chapter 4 examines the determinants of referrals from veterinary paraprofessionals to professional veterinarians. The Chapter 5 examines whether veterinary paraprofessionals perform correct disease diagnosis and prescribe correct drugs for selected endemic diseases. The chapter also examines whether interaction between veterinary paraprofessionals and professional veterinarians would result in correct drug prescription and disease diagnosis. Chapter 6 concludes and offers policy recommendations and areas for further research. After presenting the importance of animal health services in developing countries, a framework for analyzing animal health services is developed in Chapter 2 based on Williamson’s discriminating alignment hypothesis. This framework combines both market failure and governance attributes to assess the cost-effectiveness of different institutional arrangements for animal health services. Some of these attributes include externality, transaction intensity, care intensity, measurability, and state and community capacity. Using this attributes, testable hypotheses regarding the appropriateness of institutional arrangements for providing animal health services are developed. Using data from Uganda and Kenya on clinical veterinary services, empirical tests of these hypotheses are performed to demonstrate the application of Williamson’s transaction cost theory to veterinary service delivery. The empirical results show that paraprofessionals are desirable because they offer needed care and attention to clients since they are located closer to livestock producers and thus have lower transaction costs and may be trusted more by farmers. Professional veterinarians, on the other hand, are preferred by farmers when cases require technical expertise (high measurability). The use of paraprofessional services is found to be positively associated with the availability of veterinarians, implying the existence of synergistic relationship between veterinarians and paraprofessionals. In other words, a referral system may be the most costs effective approach for building state and community capacity to provide veterinary services. After developing the framework for analyzing the provision of animal health services, Chapter 3 examines the process of providing animal health services using Uganda as a case study. A participatory mapping tool called Process Net-Map is used to identify relevant actors and assess their influence in the delivery of clinical and preventive veterinary services in both pastoral and intensive livestock production systems. The tool also helps elicit governance challenges in veterinary service delivery. The results reveal that important social relations in ensuring the provision of quality veterinary services and the timely reporting of animal disease in veterinary service delivery include: (1) cooperation between private veterinarians and paraprofessionals, as well as private veterinarians and government veterinarians in intensive production systems; and (2) cooperation between NGOs, government veterinarians, and community based animal health workers (CAHWs) in pastoral areas. The limited number of trained paraprofessionals and professional veterinarians, absenteeism by government veterinarians, insufficient and unpredictable budgets, weak legislation, exclusion of technical staff from the decision making process, and policy illogicality are identified as major governance problems in veterinary service delivery. Respondents also noted that the quality of veterinary services is very low because paraprofessionals without animal health training have dominated animal health markets in Uganda and the key to improve veterinary services is to build referral arrangements between paraprofessional and veterinarians. Although the literature on animal health service delivery recognizes that referrals between paraprofessionals and veterinarians are important in ensuring correct drug prescriptions and in improving disease surveillance, detection, and reporting, little is known about determinants of referrals between paraprofessionals and professional veterinarians. Chapter 4 analyzes data collected from paraprofessionals in Kenya and Uganda to identify factors influencing referrals from paraprofessionals to veterinarians using a probit regression model. The results show that the determinants of paraprofessional referrals to veterinarians include: paraprofessional’s mobile phone ownership, gender, attendance of short term trainings, annual assessments, and membership in paraprofessional associations. This chapter argues that policy makers should invest in legislation for paraprofessionals, supervision of paraprofessionals, the expansion of mobile phone ownership by paraprofessionals, the formation of paraprofessional associations, and short term training for paraprofessionals to build and strengthen referrals from paraprofessionals to veterinarians. The question of the quality of veterinary services provided by paraprofessionals has been contested in the animal health service delivery literature. Chapter 5 examines this question by using a role play experiment to analyze how the interaction of farmers and service providers influences the quality and demand for clinical services. The quality of clinical services is measured by scoring the accuracy of a service provider prescribing the appropriate drug for selected endemic animal diseases in each of the game’s four rounds. Statistical tests establish whether the quality of services provided by different types of paraprofessionals and veterinarians differ. Learning curves for service providers are constructed to examine whether the quality of services provided by paraprofessionals improves as they continue to interact with veterinarians. Belief updating curves are constructed for farmers to examine whether they change their beliefs about paraprofessionals after receiving information about the quality of they (farmers) receive from service providers. A probit regression model for binary panel data is estimated to determine the factors that influence farmers’ decisions to change service providers. The results show that the ability to identify the signs of different diseases and the accuracy of prescriptions by veterinarians is not significantly different from that of paraprofessionals trained in veterinary science. However, the ability of service providers who are not trained in veterinary medicine to perform these tasks is significantly lower than that of service providers trained in veterinary science. The continued interaction between paraprofessionals and veterinarians gradually leads to an improvement in the ability of paraprofessionals trained in general agriculture and social sciences to perform these tasks. This is not the case for paraprofessionals with no formal training or education. Farmers do not easily change their beliefs about paraprofessionals, even if they receive information on their lack of ability to diagnose diseases and prescribe drugs correctly. Belief updating depends not only on the outcome of the previous round, but also on the gender of the farmer and on the livestock production system. This paper argues that the slow pace in which farmers update their beliefs about paraprofessionals limits paraprofessionals’ willingness to learn and to consult with veterinarians. However, the use of “animal health cards” (records of diagnoses and treatments) could induce paraprofessionals to provide better quality services as well as enable farmers to measure the quality of services, thus improving the quality of veterinary services in the long run. The main policy recommendation generated from this thesis are the following: (1) There is a need for developing countries to invest and create an enabling environment that supports paraprofessionals and professional veterinarians’ relations to ensure timely reporting, treatment, and control of animal disease. This would help reduce wastes and efficiencies in animal production as well as human health risks. (2) The provision of veterinary extension services should focus not only on household heads, but on other household members as well, such as spouses/wives and herdsmen. This could contribute to improved reporting, treatment, and disease control, thus reducing the risks of animal loss and the spreading of diseases to other animals, livestock farms, and humans. (3) Stronger government engagement in the provision of veterinary services in pastoral or extensive livestock is required because the market has failed to attract private and trained paraprofessionals. Our findings indicate that the effort to close this gap by promoting community animal health workers with rather limited informal training has proven to be a rather problematic answer to this problem. This is especially true when these service providers are expected to fulfill a major role in providing curative services since this may lead to the inefficient use or potentially dangerous misuse of veterinary drugs. (4) Farmers need to be empowered to hold service providers accountable by developing and experimenting with tools, such as animal medical cards, that would enable them to measure the quality of services they receive and distinguish qualifications of different services providers. (5) Investment in veterinary education is needed to ensure that enough qualified veterinary staff (both diploma and degree holders) are available to offer veterinary services. This could be achieved by supporting and encouraging recognized universities or tertiary institutions to establish training centers in livestock producing areas and by offering scholarships targeting training community-based animal health workers or students from marginalized/pastoral livestock areas.
Der Zusammenhang zwischen Preis und Qualität auf Konsumgütermärkten : Befunde, Interpretationen, Schlussfolgerungen
(2015) Imkamp, Heiner; Sousa-Poza, Alfonso
For more than 60 years, numerous studies have shown low price-quality correlations on consumer goods markets. The coefficients are mostly close to 0.2. That prices fail to function as valid indicators of product quality has often been interpreted as informational market failure. This dissertation, however, argues, that, according to the economic theory of price formation, prices are not an indicator of quality, but an indicator of scarcity. This allows the conclusion that workable consumer goods markets, at least as seen from the consumers point of view, should be characterized by low or even negative correlation coefficients rather than by strong positive coefficients.