Despite improvements in production incentives, agricultural output in Africa remained sluggish through the 1990s. Low use of purchased inputs
may be part of the cause of persistently low productivity in African agriculture. This article analyzes the roles of relative prices and transactions
costs in explaining low use of chemical inputs among Tanzanian coffee growers. A sample selection model indicates that output prices exert great
influence on input purchases and that both fixed and variable transactions costs affect input use decisions. Travel costs in input and output markets
have distinct effects on input usage, implying distinct avenues for interventions to promote more intensive use of agricultural inputs.