Communication vs. Transportation: the relative contributions of railways and Post Offices to British Indian grain price convergence

"Rice and wheat markets in British India saw a broad convergence in prices across districts during the late nineteenth and early twentieth centuries. Earlier studies stressed the importance of railways in this type of market integration. Andrabi and Kuehlwein (2010), however, argued that railways were capable of explaining only about 20 percent of this price convergence, possibly because of alternative pre-existing transportation networks. This paper adds data on post offices to see if communication advances can explain some of the unexplained price convergence. With the limited data available to us, we find that postal density and railways explain roughly comparable shares of the observed price convergence. Postal density with respect to population appears to be much more important than that with respect to the area or number of towns in a district. We also find little evidence of either complementarity or substitutability between the effects of postal density and railways on price dispersion. "