In an empirical study conducted in fish markets along the coast of Kerala (South India), Robert Jensen found that the introduction of the mobile phone allowed improved flow of price information that resulted in a more efficient functioning of the market.
Before mobile phone were introduced or coverage was available in Kerala, fishermen would generally return to their “home” markets with their catch. Oversupply meant that fish had to be routinely dumped into the sea to keep prices stable even if (unknown to the fishermen) there were markets 10kms away were fish were in greater demand. Mobile phones enabled price information from other markets to be available while the fishermen was still at sea. The fishermen would divert his boat to the market that offered the highest price for his catch. After mobile phones were introduced, the practice of “dumping” fish overboard stopped; fishermen’s profit rose by 8% and consumer prices fell on average by 4%; the “law of one price” came into effect where single rate for sardine was obtained along the coast.
The Economist has a good write-up. A presentation by the author of the study.
I think more such microeconomic studies will make a stronger case for ICT’s impact on development compared to what has been attempted so far.
3 Comments
Dharm Chaturvedi
I am a fishery professional. The article gives correct insigh.