The practice of the auction as an efficient market proposal for the cattle fair: The case of Alagoas

Abstract

This article analyzed the practice of the auction as an efficient market proposal for the Livestock Fair of Alagoas. The aim of this work is to verify the economic impacts resulting from the adoption of the auction practice, since the current modus operandi is subject to interpositions arising from the imbalance of bargaining power and informational asymmetry, not allowing an efficient allocation. The research was carried out in the two largest fairs of the State, occurring in the municipality of Dois Riachos and in the village of Canafistula de Frei Damiao in the municipality of Palmeira dos Indios. After the questionnaire application and in loco visits, it was possible to diagnose that the bargain market present at the fair is inefficient, existing informational asymmetry in buyer and seller relations, resulting in an unequal division of the conflict set, with 47% for the seller and 53% for the buyer. Therefore, this fact evidenced the lower bargaining power for the seller. The practice of auction changes the game to non-cooperative, eliminating the pre-existing problems and making the average prices of the animals sold are higher. Thus, the practice of the auction is a viable alternative to increase the efficiency of the Livestock Fair of Alagoas.