Information Transmission and Market Integration: The Impact of Telegraph Construction on the Grain Markets in Late Imperial China

45 Pages Posted: 28 May 2020 Last revised: 15 Jun 2020

See all articles by Yu Hao

Yu Hao

Peking University - School of Economics

Yuanzhe Li

Peking University

John V. Nye

George Mason University - Department of Economics; Mercatus Center; National Research University Higher School of Economics

Date Written: May 27, 2020

Abstract

How much did the telegraph improve market integration in imperial China? We exploit differences in the timing of telegraph construction in different prefectures in the late 19th to the early 20th centuries to show that telegraph presence in both prefectures decreased the monthly grain price difference by nearly 20%. Also, the telegraph boosted economic development and had a mitigating effect on rice prices when disasters occurred. The effect was also stronger for prefectures less accessible to waterways. Merchants’ trade levels, political connections, human capital, and social capital all played a role in the telegraph’s promotion of market integration.

Keywords: Chinese history, information, telegraph, grain prices

JEL Classification: JEL F14, L96, N75, O13, O33, Q11, Q13

Suggested Citation

Hao, Yu and Li, Yuanzhe and Nye, John V. C., Information Transmission and Market Integration: The Impact of Telegraph Construction on the Grain Markets in Late Imperial China (May 27, 2020). GMU Working Paper in Economics No. 20-17, Available at SSRN: https://ssrn.com/abstract=3612145 or http://dx.doi.org/10.2139/ssrn.3612145

Yu Hao

Peking University - School of Economics ( email )

Beijing
China

Yuanzhe Li

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

John V. C. Nye (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-4272 (Phone)

Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

National Research University Higher School of Economics

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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