In 2007 Harvard economist Robert Jensen published what was essentially a study of real-world arbitrage with a look at the impact of technology (mobile telephones) on fish market prices in Kerala, India.
A contemporaneous report of his paper was published by the Economist newspaper and serves as a neat summary. The full paper can be found here.
The work has since become very well-known mainly for the hope that embracing new, affordable “better information” tools held out for the developing world.
Unfortunately it turns out the world – and markets – are more complicated than Mr. Jensen’s work implied. Subsequent research, notably this paper by Steyn and Das, set out several factors that act as obstacles to the efficient price arbitrage of Jensen’s analysis: regulation, trust in other market participants, fatigue and specific port idiosyncrasies (among others). Steyn went on to provide further detailed refutations in this 2016 paper.
Here is the point – and we say this a lot to our research subscribers: context matters in the search for relative value and long/short trade opportunities (and development policy too).