Price Formation at Darya Ganj

David Clarance & Mehek Rastogi

1. Research Statement: To determine price formation in the Sunday books market at Darya Ganj taking into account the information asymmetry present at different levels.
(A) How are prices formed between the producers and retailers taking into account the information asymmetry?
(B) How are prices formed between the retailer and final buyer taking into account the information asymmetry?
(C) How do these prices compare with perfect information equilibrium prices?

2. Research Method
(A) Primary
(B) Quantitative

3. Past Research on the subject
(A) Uncertainty – The Market for Lemons: Quality Uncertainty and the Market Mechanism, George A Akerlof (1970)
(B) Information Asymmetry and Levels of Agency Relationships – Debi Prasad Mishra,Jan Heide, Stanton G Cort(1998)

4. Feasibility Constraint
(A) Time – The book market is only open once a week.
(B) Interviews – Building relationships with producers and retailers.

5. Evaluating Progress
(A) Plan of Action
a. Week One: Review literature and gather contacts of distribution houses that supply the books to the Darya Ganj retailers. Also prepare a broad framework of book types to be studied (eg. Novels, School books).
b. Weekend One: Field Trip to Darya Ganj.
c. Week Two: Visit the distribution houses and continue to review literature.
d. Weekend Two: Field trip to Darya Ganj.
e. Week Three: Visit the distribution houses and continue to review literature.
f. Weekend Three: Field trip to Darya Ganj.
g. Week Four: Begin to sort and analyze the data collected. Hopefully start writing.
h. Weekend Four: Field trip (if required)
i. Week Five: Continue to write and correct the paper.
j. The beginning of the Sixth Week – Put finishing touches to the paper.

(B) Risk factor
a. Data issues
b. Building relationships with producers and retailers
6. Outputs
(A) Research Paper
(B) Opeds (possibly)