Gain and Free-Ride on Skydom: The Effect of an Information-

Sharing Platform on Rural China

Zhigang Li, The University of Hong KongQiao 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 4,440HH 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