We generalise Basu’s (1986) model of triadic power. For one landlord and multiple merchants the landlord’s threat towards a labourer becomes credible in the original stage game. For multiple landlords and merchants we generalise more recent solutions. We estimate a reduced form of the model, where equilibrium rural wages are a function of the number of landlords, distance to merchants, characteristics of the labourers and the distance to external markets. We apply LSMS data from Nepal, and find support for the triadic model. In particular, the influence via the merchants depends on the number of landlords.

Magnus Hatlebakk

Senior Researcher; Coordinator: Poverty Dynamics

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