Saturday, October 14, 2006

On Cell Phones and Indian Fishing

Sunday's Washington Post has a fascinating article about how cell phones have revolutionized the Indian fishing industry. (Yes, you read that correctly.)

The reader who alerts me to this story also sends along a paper on the topic by Kennedy School professor Robert Jensen. As far as I know, the paper is not available on the web, but here is the abstract:

When information is limited or costly, agents are unable to engage in optimal arbitrage. Excess price dispersion across markets can arise and goods may not be allocated efficiently; in this setting, information technologies may improve market performance and increase welfare. Between 1997 and 2001, mobile phone service was introduced throughout Kerala, a state in India with a large fishing industry. Using micro-level survey data, we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion, the complete elimination of waste and near-perfect adherence to the Law of One Price. Both consumer and producer welfare increased.
The paper is forthcoming in the Quarterly Journal of Economics.