Growth Response to Competitive Shocks: Market Structure Dynamics Under Liberalisation - the Case of India
Liberalisation transforms market structures through the behavioural responses of incumbent firms and entrants, large firms and small, to enhanced freedom of choice. Change in market share volatility, and change in the effective agility of small and large firms underpin changes in market structure. We analyse these processes for Indian manufacturing industries over the 18-year period from 1980, spanning the domestic liberalisation of 1985 and the more comprehensive reforms of 1991, using a data set of large and medium firms in 83 industries. We find that while market structures themselves appeared to change little, turbulence in market shares, as well as the way growth is related to size responded markedly, differing in direction and magnitude, depending on whether the liberalisation was partial and domestic, or comprehensive. We find that they tended to offset each other, leading to little visible change in market structure itself. We also find that while drivers of market structure traditionally recognised in industrial organisation studies had significant impacts on both components of concentration change, their dynamics are captured very well by a parsimonious model that has just the announcement effects - the reform dates.
|Date of creation:||Jun 2003|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.cbr.cam.ac.uk/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kumar, Nagesh, 1990. "Mobility Barriers and Profitability of Multinational and Local Enterprises in Indian Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 449-63, June.
- Rakesh Basant & Pankaj Chandra, 2002. "Building Technological Capabilities In A Liberalising Developing Economy: Firm Strategies And Public Policy," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(4-5), pages 399-421.
- Ghemawat, Pankaj & Khanna, Tarun, 1998. "The Nature of Diversified Business Groups: A Research Design and Two Case Studies," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 35-61, March.
- S. W. Davies & Paul A. Geroski, 2000. "Changes In Concentration, Turbulence, And The Dynamics Of Market Shares," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 383-391, August.
- Rakesh Basant & Pankaj Chandra, 2002. "Building technological capabilities in a liberalising developing economy: Firm strategies and public policy," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(6), pages 1-23.
When requesting a correction, please mention this item's handle: RePEc:cbr:cbrwps:wp263. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb)
If references are entirely missing, you can add them using this form.