How Do Agricultural Markets Function in Political Conflict? Israeli Experiences and Views of Israeli-Palestinian Wholesale Food Trade

The Israeli-Palestinian conflict has resulted in societal alienation between both conflicting parties. In some contexts, such as trade, cooperation continues. We provide a micro-level analysis of economic interactions between Israeli and Palestinian fruit and vegetable traders in order to shed light on how institutions in agricultural markets and food trade work subject to fierce political conflict. A unique dataset enables insights into institutions and agents’ perceptions of this economic exchange. Israeli-Palestinian trading patterns are found to be mostly informal and surprisingly extensive. Education and personal social networks appear to be key facilitation factors. Israeli traders do not feel affected by the conflict, but wish for a quick resolution. The few transaction problems reported are mainly caused by the political situation and payment behaviour. Despite the on-going conflict, daily contact between economic agents has lead to continuous economic cooperation and has improved the perception of the partners from the other party.