Railways and Price Convergence in British India

53 Pages Posted: 1 Aug 2009  

Tahir Andrabi

Pomona College - Department of Economics

Michael Kuehlwein

Pomona College - Department of Economics

Date Written: July 31, 2009

Abstract

The period 1861 to 1920 witnessed sharp price convergence in British Indian grain markets. Previous research attributed this to the construction of railways. But tests examining price differences between districts provide surprisingly weak support for that hypothesis. Railways mattered, but seem capable of explaining only about 20% of the decline in price dispersion. One explanation may be that India was a partially integrated economy at the time of railroad expansion. Lines connecting districts on pre-existing trade routes had very small price effects. There is also some evidence of a “border effect” on lines between British India and princely states.

Keywords: Railways, price, convergence, India

JEL Classification: N55, N75

Suggested Citation

Andrabi, Tahir and Kuehlwein, Michael, Railways and Price Convergence in British India (July 31, 2009). Available at SSRN: https://ssrn.com/abstract=1442013 or http://dx.doi.org/10.2139/ssrn.1442013

Tahir Andrabi

Pomona College - Department of Economics ( email )

Claremont, CA 91711
United States
909-607-2513 (Phone)
909-621-8576 (Fax)

Michael Kuehlwein (Contact Author)

Pomona College - Department of Economics ( email )

Claremont, CA 91711
United States
909 607 4016 (Phone)
909 621 8576 (Fax)

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