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Gain and Free-Ride on Skydom: The Effect of an Information-
Sharing Platform on Rural China
Zhigang Li, The University of Hong Kong
Qiao Yu, Tsinghua University
Xiaoyu Dong, Sichuan Telecom
The Skydom
• A network consisting of – a central server,– multiple terminals (located in villages),– personnel in charge of the terminals,– and devices connected to the terminals that can
receive/send (short) text messages from/to farmers/governments/farmers’ associations
– Two way information flow possible
• The network (Skydom Information Network) covered 1/3 of villages in Sichuan province of China by 2006
Research Questions
• Have the Skydom improved the performance of – farmers’ production and– the operation efficiency of farmers’
associations?
• Why?– Reduction in information-conveying cost
Data
• All villages covered by the Skydom (around 1000)
• March-April, 2006
• 10-15 questionnaires for farmers and 3-5 for farmers’ associations per village
• Success rate: 40%– Farmers: 4,507– Farmers’ associations: over 200
Main Issues with Data
• Selective sampling– Selection by surveyors– Selection by famers (associations) in joining
the Skydom (the only provider of the kind of network benefit)
Summary Statistics
Mean # of Obs.
Male .23 4,440
HH Income 21,000 4,351
Joining Skydom and Farmers’ Performance
Why Joining Skydom was Insignificantly Related to Farmers’ Performance?
• Self selection• Information available might not be
valuable• Free-riding
– Significant share of farmers who claim to receive Skydom information but admit that they have not joined Skydom
– Surprisingly low ratio of WTP-Benefit for Skydom service
Joining Skydom and the Efficiency of Farmers’ Associations
Regression Results (Farmers’ Associations)
Possible Explanations
• Skydom reduced the cost of conveying information
• Self selection: Managers that are more concerned about the information-conveying efficiency are more likely to join Skydom
• Measurement errors: Managers of associations that join Skydom might be willing to exaggerate the increase in their organizations’ efficiency.
Important Message from this Study
• The benefit of this kind of network might be especially high for farmers’ associations. It is worth investigating further.
• It might much more complicated to use the similar kind of network to generate significant benefits to farmers
• Tailoring information to farmers’ need (given the capacity restriction of cell phone text-messaging)
• Free-riding