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CE Question 2. When information about a market is limited or costly, it may be hard to find trading partners and prices may vary across
CE Question 2. When information about a market is limited or costly, it may be hard to find trading partners and prices may vary across trades (price dispersion). Information technologies have the potential to improve market efficiency by reducing price dispersion. Below is a graph showing how price dispersion for fish decreased in India when cell phone towers were built and information about prices up and down the beach became easier to obtain (phones added). Due to high investment costs, the cell phone towers were built in a staggered way. In other words, some regions had earlier access to mobile phone services than others. Average price (in rupees) for one kilogram of sardines in each region, over half a year. With this setting in mind ... (a) Which causal inference method allows you to estimate the causal impact of mobile phone adoption by fishermen and retailers on price dispersion? Explain briefly the basic strategy of how you would analyze the data. (b) Discuss the key assumption(s) underlying your empirical approach
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