Conduct of Participants in The Retail Market for Metal Products in Kakamega County, Kenya

Abstract

This paper investigates the conduct of participants in the retail market for metal products in Kakamega County, Kenya in bid to assess its competitiveness. The primary data used to analyze the market conduct is based principally on a sample of 249 respondents interviewed in 2015 in the Towns of Kakamega and Mumias. Descriptive survey and causal designs were employed due to their suitability in detailing the market conditions and in hypothesis testing. The results indicate that conduct in the retail market for metal products was influenced mainly by product promotion (displaying and giving discounts) and business networks while prices were determined through a mix of strategies including vertical coordination and collusion, thus confirming (Koutsoyianni's, 1993) observation that no industry is perfectly competitive. The findings have distinct policy relevance in several respects. First, they point to the need to formulate regulations requiring prices for metal products be displayed and that standard weights and measures be used in the entire retail market. This can ensure that the consumer is given the necessary market information in order to make rational decisions. Secondly, there is need for regulations calling on enterprises to join business associations/networks to enhance access to and utilization of market information. Thirdly, appropriate tariff rates for information, communication and technology as well as social media should be formulated to contribute to consumer enlightenment and product promotion. Finally, there is need for continuous reduction in opportunities for exploiting imperfectly informed buyers and sellers further helping to maintain competitive business conduct as well as markets.