Global Arbitrage

By Ramesh Akkineni
in a sense most of the businesses start as arbitrage opportunities... when there is a difference in the price of something on two different markets, the arbitrageur simultaneously buys at the lower price and sells at the higher price... most of the IT,BPO services business are based on Currency, Labour arbitrage. most arbitrage opportunities last a short while... but here we see them last for more than a decade... it is as though the 'invisible hand' has been delayed to a great extent. but some time the market will catch up with reality(that is, the meter will show the reading some time)... when that happens we will see salaries for jobs which are easily transportable or replaceable being same all over the world... presently the transaction costs are high for certain kind of services but they will decrease with the progress of technology...which means less resources needed to exploit the arbitrage opportunity... this will force the arbitragers to adapt and innovate to move to next level where there is kind of 'brand' or 'lock-in' in the business... for investing in the arbitrage based business we have to be aware that this business will have to move away from present model or else we have to move to another investment later...

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