Reducing information friction works wonders

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On January 14, 1997, 11 fish boats brought to the market in the city of Badagara found the market crowded and threw away their catch. Surplus - 11 boats. But at the fish markets 15 km from Badagara, there was excess demand: 15 buyers left the Chombala market, unable to buy fish for any money.

Everything changed when fishermen got mobile phones. Back at sea, returning fishermen would call the beach fish markets and pick the one with the highest prices that day.

By accessing real-time market information about relative fish prices, fishermen can adjust their production model (the fishery) and distribution model (the market they visit) to maximize profits.

A study of 15 beach markets located along 225 km of the north coast of Kerala found that after fishermen used mobile phones, the difference in daily prices at beach markets was reduced to a quarter compared to the previous level. Not a single boat threw away its catch.

Reducing waste and removing fishermen's bargaining power increased their profits by 8%, while consumer prices fell by 4%.

Reducing information friction works wonders.

Grigory Bazhenov 2022-10-16