The last few days I've been piloting the survey instrument around Patna to figure out the best way to phrase certain questions and the best way to select respondents. Yesterday the team, which is growing very quickly, went to Punpun block about 25-30km south of Patna to test the questionnaire in a more rural and isolated environment. This area is well known for making jokejokes of its village names. Some common examples: Where do you go to get cow products? Dehri village. Where do you go to get Jewish holiday fixtures? Manora village.
Around 12:30 we stopped for lunch at a roadside stall. There were four of us, and I decided that it would be appropriate to pay for the whole team, even if it turned out to be a bit much, as a kind of welcome-to-the-survey gesture. Between the four of us, we ate about 7 samosas, 6 kichori, as much chana masala as we wanted, and two gulab jamuns (for me). I was surprised when I asked how much I owed, and it turned out to be only Rs 45 total, or about $1. Each item cost Rs 3.
Later that afternoon, after finishing our work, we stopped at the same place to have some tea. I noticed a bus was nearby and about to depart. The bus, which was about half the size of school buses in the US, was completely packed with people, so much so that three people were not inside but were hanging out of the door, grasping onto whatever they could, with another 10 or so people on top. I asked where they were going - Patna - and how much it cost to get there - Rs 10-15, or about $0.25. This also surprised me because Patna was pretty far, especially in terms of time, since covering 25-30km in Patna traffic on Bihar roads takes 1-1.5hrs.
But then when I thought back on my lunch, a third thing surprised me. Samosas in Patna cost Rs 6, 100% more than samosas in Punpun. A round-trip ticket between Punpun and Patna cost Rs 20-30. So as long as a person could carry at least 10 samosas with them from Punpun to Patna, and assuming that they would buy at Rs 3 (probably even less, if they could get a bulk discount) and sell close to 6 (for marginal savings on the part of the second buyer), then they would come out on top. But an even better situation would be for the bus driver to get in on the business. If he engaged in arbitrage, then he would make as much by bringing 4 samosas to Patna as he would by bringing one person to Patna. And samosas are a lot smaller and lighter than people. Really, he could fit thousands of samosas into (and on top of) his bus, but he can only fit a maximum of 50 people, no matter how tightly he packs them in.
So why aren't Punpun-Patna bus drivers substituting people for savory cargo? Is it because samosas are perishable goods? Freeze them in Punpun and reheat them in Patna. Is it because such a large influx of samosas in Patna would depress prices enough to make it unprofitable? Doubtful - if one samosa is consumed for every ten residents of Patna per day (a very conservative estimate), then 3000 extra samosas per day would represent only 2% of total demand. Is it because local suppliers in Punpun don't have the capacity to make 3000 samosas? Then build a samosa factory! What am I missing here?
Around 12:30 we stopped for lunch at a roadside stall. There were four of us, and I decided that it would be appropriate to pay for the whole team, even if it turned out to be a bit much, as a kind of welcome-to-the-survey gesture. Between the four of us, we ate about 7 samosas, 6 kichori, as much chana masala as we wanted, and two gulab jamuns (for me). I was surprised when I asked how much I owed, and it turned out to be only Rs 45 total, or about $1. Each item cost Rs 3.
Later that afternoon, after finishing our work, we stopped at the same place to have some tea. I noticed a bus was nearby and about to depart. The bus, which was about half the size of school buses in the US, was completely packed with people, so much so that three people were not inside but were hanging out of the door, grasping onto whatever they could, with another 10 or so people on top. I asked where they were going - Patna - and how much it cost to get there - Rs 10-15, or about $0.25. This also surprised me because Patna was pretty far, especially in terms of time, since covering 25-30km in Patna traffic on Bihar roads takes 1-1.5hrs.
But then when I thought back on my lunch, a third thing surprised me. Samosas in Patna cost Rs 6, 100% more than samosas in Punpun. A round-trip ticket between Punpun and Patna cost Rs 20-30. So as long as a person could carry at least 10 samosas with them from Punpun to Patna, and assuming that they would buy at Rs 3 (probably even less, if they could get a bulk discount) and sell close to 6 (for marginal savings on the part of the second buyer), then they would come out on top. But an even better situation would be for the bus driver to get in on the business. If he engaged in arbitrage, then he would make as much by bringing 4 samosas to Patna as he would by bringing one person to Patna. And samosas are a lot smaller and lighter than people. Really, he could fit thousands of samosas into (and on top of) his bus, but he can only fit a maximum of 50 people, no matter how tightly he packs them in.
So why aren't Punpun-Patna bus drivers substituting people for savory cargo? Is it because samosas are perishable goods? Freeze them in Punpun and reheat them in Patna. Is it because such a large influx of samosas in Patna would depress prices enough to make it unprofitable? Doubtful - if one samosa is consumed for every ten residents of Patna per day (a very conservative estimate), then 3000 extra samosas per day would represent only 2% of total demand. Is it because local suppliers in Punpun don't have the capacity to make 3000 samosas? Then build a samosa factory! What am I missing here?
I think the reason is, it is very hard to sell cold samosas. People generally prefer it to be hot. I am sure the idea of freezing samosa in Punpun and reheating it is Patna is alien to the people and it involves substantial money. Reheating samosas are also problem. You cannot fry the samosa twice. That kills the taste. You have to wait for MacDonald in Patna For the arbitrage to be exploited.
ReplyDeleteOh your blog reminds me of samosa's with chutney.
I initially had the same reaction as 9thlife, but having seen a lot of Delhi side of the road vendors whose samosas sit there for 10 hours a day, I don't think it is about them being colder, but rather economics (what a surprise that I think this). Even if the person were to bring the samosas to Patna, the structure of the samosa market there would make it impossible to distribute them. Samosa vendors have no centralized distribution system, and the transaction costs of putting one in place would be high, especially in bringing together vendors from different groups/castes. Thus even if he brought them to Patna, he wouldn't know what to do with them, as the upfront cost of organizing that would be too high; thus arbitrage doesn't occur. With a business like a truck from place to place, the market is less fragmented.
ReplyDeleteThe more I think about it, the more it seems like this could be an industrial organization paper. Want to co-author stuff together?
Hahahaha. This is just great!
ReplyDelete