Market Performance, Welfare in South Indian Fisheries Sector

Response paper

Name

Institution

Date

RESPONSE PAPER

THE DIGITAL PROVIDE: INFORMATION (TECHNOLOGY), MARKET PERFORMANCE, AND WELFARE IN THE SOUTH INDIAN FISHERIES SECTOR*

R OBERT

Jensen

A. Introduction and Background

(i). Is the paper mainly theoretical or empirical?

The paper is mainly empirical, and the researcher highlighted that Bayes–Nash equilibrium was effective in analyzing the effect of price dispersion in the fish markets. The researcher further goes on to investigate the impact of access to mobile devices on waste, price dispersion and welfare.

(ii). What is/are the question/questions the author attempts to answer in this paper? Is it related to any economic concepts? Is it relevant to any policies in developing countries? Explain your answer.

• What is the value of access to mobile phones among fishermen in Kerala, India?

• How does information flows affect fishermen in rural areas with no ready access to market price information?

• How does the introduction of mobile phones affect market outcomes (price dispersion, waste, and welfare) when there is price information? (Jensen, 2007).

The concept of arbitrage and economic efficiency are relevant to the article, since the fishermen had better knowledge of market conditions and price differentials. This improved efficiency and reduced wastage as the fishermen had better access to market price than before when mobile phones were introduced and this also reduced price dispersion. This is relevant to developing countries where information is severely restricted and access to information improves the economic and social well-being of the people. In the case of Kerala there was less wastage and improved resource management when the fishermen accessed more market information.

B. Economic Content

Define law of one price and arbitrage. How are they related to this paper?

The law of one price in tradeable goods that the same price will be assigned to the same product and when different places, the difference in prices should be the result of transportation costs. Arbitrage is a form of trading when the buyers or sellers of securities or commodities trade for higher returns because of the price differentials in diverse markets. Before there was access to mobile phones, the middlemen charged more to the fishermen, as they had information on market conditions, while the fishermen had incomplete market information. The middlemen leveraged ...