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Railways and Price Convergence in British India

Published online by Cambridge University Press:  01 June 2010

Tahir Andrabi  and
Michael Kuehlwein
Tahir Andrabi*
Affiliation:
Professor, Department of Economics, Pomona College, Claremont, CA 91711. E-mail: tandrabi@pomona.edu and mkuehlwein@pomona.edu.
Michael Kuehlwein*
Affiliation:
Professor, Department of Economics, Pomona College, Claremont, CA 91711. E-mail: tandrabi@pomona.edu and mkuehlwein@pomona.edu.
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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 percent 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 preexisting trade routes had very small price effects. There is also some evidence of a “border effect” on lines between British India and princely states.

Type
ARTICLES
Information
The Journal of Economic History , Volume 70 , Issue 2 , June 2010 , pp. 351 - 377
Copyright
Copyright © The Economic History Association 2010

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