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Trade liberalisation, market power abd scale efficiency in Indian industry

Author

Listed:
  • Pulapre Balakrishnan

    (Centre for Development Studies)

  • K. Pushpangadan

    (Centre for Development Studies)

  • M. Suresh Babu

    (Centre for Development Studies)

Abstract
Using information on listed firms in each of the industry groups atthe two-digit level within Manufacturing this study investigates whetherthe radical shift in trade policy in India in 1991 resulted in a reductionin market power and/or an improvement in scale efficiency. We estimatea group-wise production function allowing for firm-specific effects. Aplausible estimate of market power is obtained and the assumption ofconstant returns to scale is mostly rejected. As regards the effects of thetrade-policy shock of 1991, evidence of a move to a more competitivemarket structure or of an improvement in scale efficiency is notwidespread across Indian manufacturing.

Suggested Citation

  • Pulapre Balakrishnan & K. Pushpangadan & M. Suresh Babu, 2002. "Trade liberalisation, market power abd scale efficiency in Indian industry," Centre for Development Studies, Trivendrum Working Papers 336, Centre for Development Studies, Trivendrum, India.
    • Handle: RePEc:ind:cdswpp:336
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    References listed on IDEAS

    as
    1. Tor Jakob Klette, 1999. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Journal of Industrial Economics, Wiley Blackwell, vol. 47(4), pages 451-476, December.
    2. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
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    7. Rudiger Dornbusch, 1992. "The Case for Trade Liberalization in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 69-85, Winter.
    8. Boozer, Michael A., 1997. "Econometric Analysis of Panel DataBadi H. Baltagi Wiley, 1995," Econometric Theory, Cambridge University Press, vol. 13(5), pages 747-754, October.
    9. Krishna, Pravin & Mitra, Devashish, 1998. "Trade liberalization, market discipline and productivity growth: new evidence from India," Journal of Development Economics, Elsevier, vol. 56(2), pages 447-462, August.
    10. Dani Rodrik, 1988. "Imperfect Competition, Scale Economies, and Trade Policy in Developing Countries," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 109-144, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Bishwanath GOLDAR & Suresh Chand AGGARWAL, 2005. "Trade Liberalization And Price-Cost Margin In Indian Industries," The Developing Economies, Institute of Developing Economies, vol. 43(3), pages 346-373, September.
    2. Hariprasad Govinda, 2016. "Competition, Openness and Inequality of Firm Size in the Indian Manufacturing," Foreign Trade Review, , vol. 51(1), pages 81-97, February.

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    More about this item

    Keywords

    Trade liberalisation; Market power; Scale Economies;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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