Price-Quality Relationships In Raw Silk Markets

Gopal Naik
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Gopal Naik: Indian Institute of Management, Ahmedabad

Indian Economic Review, 1995, vol. 30, issue 1, 101-119

Abstract: India produces mostly very poor quality silk, although it is world's second largest producer of raw silk. One of the reasons identified as contributing to poor quality silk has been the failure of market mechanisms to pay remunerative prices to good quality silk. This study examines the extent to which the price paid in Bangalore silk exchange reflects the quality of silk. This is done by regressing the prices at which the lots are transacted on their levels of quality characteristics. The results indicate that the only 76 per cent of the variation's in price is explained by the quality characteristics for both charkha and cottage basin silk suggesting a poor linkage between quality and price. The study suggests that grading silk before transaction and establishing forward contract would encourage reelers to produce better quality silk.

JEL-codes: D44 Q11 (search for similar items in EconPapers)
Date: 1995
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