On the face of it, the police version appeared to have more holes than a Swiss cheese. Here are the facts. A post-graduate student of a Chennai-based medical college is murdered in her apartment. The killer is supposed to have made his entry, taking advantage of a door that was only partially bolted. He had somehow reckoned on the victim being asleep, though it was only 10 in the morning.
He was there only to steal the mobile phone and would have made good his escape, except that he was clumsy. Waking up the victim while trying to spirit away the phone, he ends up smothering her with a pillow and later inflicts fatal knife injuries on her, as she lay unconscious.
The victim’s husband is convinced that this is too facile an explanation of the events leading up to the crime and wants the police to investigate the case in greater detail.
Stolen goods
Whatever be the facts of the instant case, the other point of interest is this: Just how vibrant is the secondary market for mobile handsets, stolen or otherwise? As news reports on the crime and the subsequent arrest of a suspect have it, the killer was smart enough to throw away the SIM card (which would have given real-time information on his whereabouts) the moment he switched it on. He then went to a dealer in second-hand mobile handsets to hawk it.
At this point, the police claim that the International Mobile Equipment Identity or IMEI (a unique number that identifies a mobile handset). already flagged by the police to all mobile service operators as a “hot” piece of equipment, comes alive as the new buyer starts to use it.
From here on, it is a simple question of tracking the new owner and the photo identity of the seller who then automatically becomes a prime suspect in the murder and, in the eyes of the police at least, the case is done and dusted.
Lucrative market
Mobile phones would not be stolen if there did not exist a lucrative market for handsets. A television channel reported last year, quoting data from the National Crime Records Bureau, that there were 19,377 cases of theft of ‘electronic components’ (primarily mobile phones) in 2013-14. One suspects that this must be a case of gross under-reporting, as the numbers are a lot larger elsewhere in the world.
A recent Daily Mail report, quoting official sources, put the mobile phone theft in UK at 700,000 in the last year. Mobile phone users are yet not aware that that there is a technological solution available to frustrate the designs of a prospective thief of their mobile phones. If they do the paperwork required to put this in place, then, sooner or later, the market for stolen mobile phones would simply cease to exist.
If the Regulator (Telecom Regulatory Authority of India), police and consumer protection organisations join hands to increase awareness about this, it is only a matter of time before such a happy denouement comes about, at least in one category of the grey market for stolen goods.
But the secondary market in mobile phones is here to stay and is not going away any time soon. Basically, a secondary market in any class of goods exists because the seller attaches a somewhat lower value to its possession, from the perspective of his own needs at that particular juncture, than does a prospective buyer, again looking at it in terms of his own needs.
Differentiated need
Let us say the seller needs a mobile phone which can access the Internet and the phone he owns at present does not possess that feature. There exists a buyer who does not possess a phone and who needs it only for making voice calls. Of course, this does not mean the seller wouldn’t try to extract the maximum price for it, nor would the buyer be willing to pay a rupee more for it than he can get away with.
Indeed, as Adam Smith argued, trade benefits both the sides involved in an exchange. The buyer profits just as much as does the seller. But the mere existence of differentiated needs from an item does not automatically translate into a secondary market for it. The ability to establish fair title to the goods is a requirement.
In the case of mobile phones, the mere possession is prima facie proof of clear title, though a secondary market in stolen cell phones is an aberration which, hopefully, should soon cease to exist.
The fiat currency is a very good example of possession that prima facie signifies title to something of value. But mere possession might not suffice if it is a piece of land or a building standing upon that piece of land. The seller has to prove by legal documents his/her claim to ownership of that land and, in the case of a building, there should be an approval from local authorities that it is constructed in accordance with local regulations. Taxes can play a role in the degree of vibrancy of the secondary market in that good.
Restrictive factors
Thus a phenomenon of ‘lifetime’ tax on motor vehicles tends to restrict the secondary market in cars to vehicles from within a State. Technically, this should not be a deterrent to a national secondary market for cars as a seller can obtain a refund from the home State and factor that into the price at which he is willing to sell, even as the buyer too, must factor in the ‘lifetime’ tax he is liable to pay in his home State, into the final price that he is willing to pay for that car.
Real estate transactions too, typically suffer from high taxes that prevent such sales from realising their full potential in the secondary market. If transactions can be put through with ease, that can contribute to greater volume of secondary market transactions in real estate. There is a reason why there is a far greater volume of turnover involving financial assets than of physical goods.
The State must do everything to encourage the creation of an active secondary market in all manner of goods as they expand the range of price points at which commerce can happen in the economy. Micro economic theory tells us that price is an overwhelming factor in the demand for goods of all kinds.
Esteem value
Producers, in their effort to enlarge the market for their products, keep coming up with products catering to the needs of consumers at various price points. Looked at from this perspective, a secondary market represents the lowest price point for that product within each sub-category (differentiated by features/functionalities) of a product.
Sometimes they represent the only market in that category. You might counter this with the example of the ‘Nano’ cars that Tata Motors came up with at a ₹1 lakh price point. Does that negate the principle? Not necessarily. A car represents a combination of ‘functional’ and ‘esteem’ values to its owner. The ₹1 lakh price point in the primary market tended to strip the owner of that ‘esteem’ value.
Indeed, one could go so far as to say that in some way it tended to assign a negative ‘esteem’ value to its owner. This led to only miniscule sales being registered. But no such stigma attaches to the ownership of cars in the secondary market. You can be sure that a vibrant secondary market exists for cars even in the sub-Rs 1 lakh price point!
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