sim2g 2G MIS Project Issues
During the agricultural liberalization of the 80s’, there was a broad consensus i) that market transparency was always good, ii) that the State had to ensure market transparency and, iii) that to achieve market transparency it was sufficient to disseminate information on the current prices of a given product in different places of a given country. Nevertheless, the practical application of this idea through the first generation of MIS gave unconvincing results posing questions about the underlying theory.
The principal conclusion of these analyses is that the main problem of first generation MIS is that they do not respond adequately to players’ needs (Galtier and Egg 2003). There are various reasons for this disconnection between the supply of and demand for information.
Some reasons are classic for public goods . Firstly, it is difficult for the MIS to know the players’ needs for information. Secondly, even if the needs can be identified, the people managing the MIS have little incentive to make the necessary effort to meet those needs. Lastly, even if the MIS managers know the demand and have the inventive to satisfy it, they must still have the wherewithal to adapt their approach in response to demand (in term of transport, financial and human resources, capacity etc.).
Other reasons are specific to market information. Indeed, in the case of market information, the disconnection between supply and demand is particularly problematic because of the role of communication within markets. While the spontaneous diffusion of information by the game of trade (arbitrage, negotiation etc.) was well-known to economists as far back as Hayek (1945), Hurwicz (1969) or Grossman (1989), it was not taken into account in the design of the first generation of MIS (Galtier and Egg 2003). Following this line of argument, to have an impact, an MIS must be well integrated with the market’s internal communication system, concentrating on types of information which are badly diffused or on market segments which do not enjoy access to information.
The market’s communication role has another very important consequence. Given that the quality of spontaneous information diffusion depends on the institutions which structure how the market functions (Smith 1982; Kirzner 1992; Galtier 2002), the diffusion of information (by the MIS) is not the only possible way to improve market transparency. It is also possible to act on the institutions themselves to make them more powerful in term of diffusion of information (for instance by developing quality standards). MIS can then be developed jointly with these market institutions.
Another interesting result provided by the theory is that market transparency is not always beneficial. It can indeed have perverse effects.
Firstly, transparency can discourage players’ efforts to discover or acquire new information, each one hoping to benefit from the information of the others (Grossman and Stiglitz 1980). This can lead to prices reflecting less and less movements in supply and demand. Therefore, even if price information circulates well within the markets (partly thanks to the MIS), the information incorporated into prices becomes very poor.
Secondly, the diffusion of information by an MIS can involve a polarization of expectations generating disequilibria and price instability (Hirschleifer, 1971; Orléan, 1989). This phenomenon has occurred in the United Kingdom, with the information disseminated by the MIS causing a price surge on some markets and a price collapse on others (Bowbrick 1988). Similarly, at the time of Niger’s food crisis of 2005, the media which spread information on the fast rise of the prices in Niamey - in particular radios diffusing in the distant rural zones - were shown to have stimulated expectations and to contributed to the sharp increase in prices.
Lastly, the information disseminated by the MIS can reinforce market collusion (agreement to fix prices) because it makes it possible to control pricing in the event that others strictly follow the prices thus fixed.
After several decades of MIS, there is no longer any certainty. The mixed impressions left by the first generation of MIS leads to a return to economic theory and a fine empirical analysis of the new forms of MIS. It now seems difficult to improve the performance of markets by disseminating information. This leads us to the following research question:
Which market information systems (MIS) make markets more transparent, more efficient and more equitable?
The problem to be solved is as follows: How to organize the MIS so as to adjust the supply of information to players’ demand, limiting the above-mentioned perverse effects of dissemination, while ensuring financial viability, but without excluding too many players from access to the information. Depending on the context, the disconnection of information on supply and demand, the perverse effects of transparency, the problems of financing and the phenomena of exclusion will be different and of varying importance. So, there is no optimal type of MIS which is universally relevant, but only types of MIS adapted to specific contexts.
All these problems are interdependent. For example, the use of the NICT to generate interactivity is a means of knowing players’ information needs, but it can also exclude those without access to these technologies. In the same way, the sale of information addresses the lack of incentives to satisfy those needs, and helps solve the financing problem, but it also risks exclusion.
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