The Journal of Economic History

Table of Contents - 2010 - Volume 70, Issue 02  

ARTICLES

Railways and Price Convergence in British India

Tahir Andrabia1 and Michael Kuehlweina1

a1 Professor, Department of Economics, Pomona College, Claremont, CA 91711. E-mail: tandrabi@pomona.edu and mkuehlwein@pomona.edu.

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.

Footnotes

We would like to thank Jishnu Das, Asim Ijaz Khwaja, Steve Marks, Kerry Odell, three anonymous referees and seminar participants at USC, Claremont Graduate University, the Pacific Coast Development Conference, the WEA annual meetings, and the NEUDC for valuable comments. Paul Tetlock provided excellent research assistance on an earlier version. All remaining errors are ours.