How do transport costs affect price dispersion of nutrient-dense foods across markets in rural Malawi?

Cost of healthy diets is high around the world as shown by recent literature. However, transport costs as a driver of regional variation in food affordability is underexplored. We examine how transport costs affect spatial or regional inequalities in affordability of foods across markets in Malawi. We use monthly consumer price monitoring panel data from January 2007 to July 2021 collected by the National Statistical Office. In combination with monthly average diesel prices and driving distance between market pairs, we estimate a panel data non-linear dyadic regression model using the Poisson pseudo-likelihood regression estimator with multiple levels of fixed effects to examine short run impacts of transport costs on price differences of nutrient-dense foods across markets. The results from our analysis confirm that the exogenous increase in transport costs does increase regional inequalities in affordability of foods across markets. This includes both more as well as less nutrient-dense foods. Thus, increase in transport costs makes it difficult for spatially separated markets to engage in trade. Although we do not find that transport costs shocks widen spatial inequality in affordability for nutrient dense foods, we do find that they increase spatial inequality for staples in the short run. Given the importance of maize and other staples in Malawi, there is a food security implication of increasing transport costs than nutrition one in the short run.