Endogenous Market Development and the Role of Farmer Collective Action in Nigeria’s Groundnut Oil Value Chain

Market development in agricultural value chains is increasingly understood as an endogenous process shaped by the strategic interactions of producers, processors, and traders rather than as an exogenous outcome determined solely by infrastructure and policy conditions. Collective action by farmer organisations can alter market development trajectories by creating countervailing market power, establishing quality standards, and reducing transaction costs. This study investigates endogenous market development processes and the role of farmer collective action in shaping market structure and outcomes in Nigeria's groundnut oil value chain, with empirical focus on Kano and Katsina States in the North West geopolitical zone. The theoretical framework integrates industrial organisation concepts of endogenous market structure with collective action theory, generating a model in which the organisational capacity of farmer associations affects equilibrium market structure and price transmission outcomes. The empirical strategy uses a panel dataset of 280 farming households and 60 processing firms covering 2018 to 2024, combined with a natural experiment exploiting the differential timing of farmer organisation formation across communities. A structural estimation approach identifies the equilibrium market effects of collective action using co-movement restrictions. Results demonstrate that communities with well-organised groundnut producer associations achieved farm gate prices 22 percent higher than unorganised communities, driven by improved price negotiation and reduced dependence on single-buyer monopsony arrangements. Market structure in organised communities shifted from bilateral monopoly toward competitive pricing over the study period. The study makes original theoretical and empirical contributions to the endogenous market development literature in the context of Nigerian commodity value chains. Keywords: endogenous market development, collective action, groundnut oil, value chain, Kano State