Search Cost and Rural Producers' Trading Choice between Middlemen and Consumers in Bangladesh

This paper assesses the impact of search cost – as proxied by the cost of access to telephones – on small-scale producers' choice between trading with middlemen and trading directly with consumers. The empirical findings suggest that search cost plays a significant role in this choice and that a reduction in search cost increases the likelihood of trading with consumers. This result has important implications related to the provision of public telephones in rural areas of developing countries.