Does Openness Promote Competition? A Case Study of Indian Manufacturing
AbstractThis paper uses firm level data for the period 1989-2001 to analyse the working of competition in India’s manufacturing sector. It examines the impact of greater competition on profit mark-up over the last decade. The econometric analysis of the factors determining markup indicates that, contrary to received wisdom, trade openness by itself does not act to reduce the profit mark-up. The paper also investigates the degree of competitiveness defined as the Lerner price-cost margin. The analysis indicates that the estimated margins are in general high over the 1990s across all industries and in most of the industries considered these margins have been increasing over the second-half of the 1990s. The market by itself does not bring about competitive outcomes. The regulatory agencies probably have a crucial role to ensure a level playing field.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2871.
Date of creation: 24 Sep 2005
Date of revision:
Competition; Indian Manufacturing;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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