Effects of violent political conflict on the supply, demand and fragmentation of fresh food markets

Violent political conflict has been documented to have comprehensive adverse effects on economic activity and, thus, substantially harm social welfare. As conflict escalations are often reported to fragment economic space, we suggest an empirical framework which allows for estimating changes in the...

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Bibliographic Details
Published in:Food security 2020-06, Vol.12 (3), p.503-515
Main Authors: Bar-Nahum, Ziv, Finkelshtain, Israel, Ihle, Rico, Rubin, Ofir D.
Format: Article
Language:English
Subjects:
Agriculture
Biomedical and Life Sciences
Computer simulation
Corridors
Costs
Economic conditions
Economics
Environment
Food
Food Science
Fragmentation
Life Sciences
Markets
Original Paper
Plant Sciences
Social Policy
Social Sciences
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Summary:Violent political conflict has been documented to have comprehensive adverse effects on economic activity and, thus, substantially harm social welfare. As conflict escalations are often reported to fragment economic space, we suggest an empirical framework which allows for estimating changes in the size of markets often split by frontlines. This approach uses a differentiated goods oligopoly model to separate effects of conflict intensity on consumer demand, costs of trade, market size, and market structure. We combine daily sales of apples in Hebron - one of the focal points of the Israeli–Palestinian conflict - and variables quantifying complementary aspects of conflict intensity. Conflict is found to suppress demand and affect competition more significantly than it increases costs of trading. Simulations indicate a 15% reduction in total daily consumption during conflict of high intensity while a pacification would yield a 20% welfare gain. This empirical framework allows disentangling the effects of conflict on food markets. The results suggest that relief policies should consider alleviating effects of fragmentation of economic space, e.g., by ensuring humanitarian corridors.
ISSN:1876-4517
1876-4525
DOI:10.1007/s12571-020-01025-y