Randomizing competition: a field experiment in rural input markets

In rural markets where buyers cannot easily verify agricultural input quality before purchase, retailers may sell degraded or counterfeit products with limited competitive pressure to do otherwise. This paper asks whether the entry of a trusted, high-quality competitor disciplines incumbent behavior. We randomized the timing of branded retail openings by a large agricultural NGO across 100 rural Kenyan markets. Our data come from a combination of a market-wide census of agro-input retailers, firm surveys, and mystery-shopping visits followed by independent lab testing of seed germination and fertilizer quality compliance. Incumbents near an early-phase entrant raise the quality floor on the seed they sell and expand the range of varieties they stock. Fertilizer quality does not respond. Entry and exit also remain unchanged, suggesting incumbents adjust along intensive rather than extensive margins.