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Is IT Enough? Evidence from a Natural Experiment in India’s Agriculture Markets

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  • Chris Parker

    (Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802)

  • Kamalini Ramdas

    (London Business School, Regent’s Park, London NW1 4SA, United Kingdom)

  • Nicos Savva

    (London Business School, Regent’s Park, London NW1 4SA, United Kingdom)

Abstract

Access to information and communication technologies (ICTs) such as mobile phone networks is widely known to improve market efficiency. In this paper, we examine whether access to timely and accurate information provided through ICT applications has any additional impact. Using a detailed data set from Reuters Market Light (RML), a text message service in India that provides daily price information to market participants, we find that this information reduces the geographic price dispersion of crops in rural communities by an average of 12%, over and above access to mobile phone technology and other means of communication. To identify the effect of information on price dispersion, we exploit a natural experiment where bulk text messages were banned unexpectedly across India for 12 days in 2010. We find that besides reducing geographic price dispersion, RML also increases the rate at which prices converge across India over time. We discuss the implications of this for development organizations and information providers. This paper was accepted by Lorin Hitt, information systems .

Suggested Citation

  • Chris Parker & Kamalini Ramdas & Nicos Savva, 2016. "Is IT Enough? Evidence from a Natural Experiment in India’s Agriculture Markets," Management Science, INFORMS, vol. 62(9), pages 2481-2503, September.
    • Handle: RePEc:inm:ormnsc:v:62:y:2016:i:9:p:2481-2503
    DOI: 10.1287/mnsc.2015.2270
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