Do industrial policy reforms reduce entry barriers? Evidence from Indian manufacturing industries
Institutional regulations by licensing and capacity restrictions are often considered as barriers to competition in Indian industry. As most of these regulations have given way to market mechanisms, an increase in the number of entrants is to be expected. This paper attempts to measure the extent of barriers to entry in Indian manufacturing industries by quantifying the height of barriers for 1991/92 and, a decade after the onset of reforms, 2001/02. We find that, contrary to expectations, the height of overall barriers increased. This suggests that dismantling of commands and controls intended to ease entry seems to have paved the way for the erection and strengthening of market barriers to entry.
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Volume (Year): 11 (2008)
Issue (Month): 4 ()
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