Entry Liberalization and Inequality in Industrial Performance
AbstractIndustrial delicensing, which began in 1985 in India marked a discrete break from a past of centrally planned industrial development. Similar liberalization episodes are taking place across the globe. We develop a simple Schumpeterian growth model to understand how firms respond to the entry threat imposed by liberalization. The model emphasizes that firm responses, even within the same industrial sector, are likely to be heterogeneous leading to an increase in within industry inequality. Technologically advanced firms and those located in regions with pro-business institutions are more likely to respond to the threat of entry by investing in new technologies and production processes. Empirical analysis using a panel of three-digit state industry data from India for the period 1980â€“1997 confirms that delicensing led to an increase in within industry inequality in industrial performance.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 4481508.
Date of creation: 2005
Date of revision:
Publication status: Published in Journal of the European Economic Association
Other versions of this item:
- Philippe Aghion & Robin Burgess & Stephen Redding & Fabrizio Zilibotti, 2005. "Entry Liberalization and Inequality in Industrial Performance," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 291-302, 04/05.
- Aghion, P. & Burgess, R. & Redding, S. & Zilibotti, F., 2005. "Entry liberalization and inequality in industrial performance," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
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- Pavcnik, Nina, 2002.
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