Transportation Policy and Panterritorial Pricing in Africa

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Abstract
Many African countries interfere with the spatial pattern of agricultural prices and often mandate a spatially constant (panterritorial) price. Such policies are conceptually identical to the pricing of transport services. The pricing and transportation policies of the Ivoirien cotton parastatal provide a case study. The loss in producer surplus from raising current revenues by panterritorial pricing is compared with an optimal policy that minimizes producer loss. For current revenues, a switch to the optimal policy would provide only small gains. At higher revenue levels, however, the gains would increase. These policies are also contrasted with another suboptimal policy—full-cost pricing of transport with an export tax. By dispersing production, panterritorial pricing inflates the gains from transport projects. Transport investment and pricing reform are therefore assessed simultaneously. The number and location of the purchasing depots are also discussed.

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