Rental markets for agricultural capital goods: the structure of pumpset services in Nepal's plains

Purpose This paper aims to examine the organization of pumpset rental markets in Nepal's Terai plains, focusing on supply-side structure, ownership patterns and price formation. Design/methodology/approach The analysis uses primary survey data from 291 farm households across 3 districts. The empirical strategy combines descriptive analysis with logit regression to identify correlates of ownership and ordinary least squares regression to examine rental pricing. Findings A pronounced ownership–usage gap exists: 44 percent of households own pumpsets, while 83 percent use pumpset services. Rental supply emerges through two channels: individual ownership concentrated among larger landholders and upper-caste households, and group ownership adopted disproportionately by small farmers and marginalized groups. Rental prices vary with seasonal scarcity and energy costs, while group suppliers charge lower prices than individual suppliers. Limited evidence of caste-based price discrimination is found. Research limitations/implications Cross-sectional data limit causal inference. The small number of group owners constraints regression-based analysis of collective ownership determinants. Originality/value This paper provides novel evidence on dual supply structures in pumpset rental markets, documenting group ownership as an endogenous institutional response to capital constraints among smallholders.