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Rice, Roads and Regulations

Naveen on Indian Economy Blog:

A key factor that can make markets work better is integration of various sub-markets. And it doesn’t happen simply by constructing tarred roads (even that is needed) but by demolishing regulations. Roading is the technical part of integrating markets, the political and more onerous part is the regulatory part. But why integration? Because deregulated common markets will remove transaction costs and foster competition; provide better signals for optimal generation and consumption decisions; and improve security of supply.

Naveen cites a paper called Market Integration in Wholesale Rice Markets in India, by Raghbendra Jha, KVB Murthy and Anurag Sharma. He might equally have mentioned the discovery in this year's Doing Business report that red tape creates 75% of the delays to trading across borders, and poor infrastructure merely 25%.

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