Andrew Foster, Brown University

Paper: Spillovers, Coordination Failure, and the Consequences of Fragmentation in Rural India

Abstract: In this paper we take advantage of a 5-year panel data set from two villages in rural
India to examine the potential role of spillovers and coordination failures as a source of
inefficiency due to fragmentation. We first develop a model based on a simple
characterization of the spatial structure of land fragments that illustrates how spillover
effects impact input use and productivity. Our results suggest that spillover effects are,
for the most part negative and that there are significant failures in coordination. The
estimates also suggest that, consistent with the model, the surprising absence of a
diversification effect may be attributed to higher levels of input variance arise in farmers
with more fragmented holdings.