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Trade Liberalisation, Market Power abd Scale Efficiency in Indian Industry

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  • Pulapre Balakrishnan
  • K. Pushpangadan
  • M. Suresh Babu

Abstract

Using information on listed firms in each of the industry groups at the two-digit level within Manufacturing this study investigates whether the radical shift in trade policy in India in 1991 resulted in a reduction in market power and/or an improvement in scale efficiency. They estimate a group-wise production function allowing for firm-specific effects. A plausible estimate of market power is obtained and the assumption of constant returns to scale is mostly rejected. As regards the effects of the trade-policy shock of 1991, evidence of a move to a more competitive market structure or of an improvement in scale efficiency is not widespread across Indian manufacturing. [Working Paper No. 336]

Suggested Citation

  • Pulapre Balakrishnan & K. Pushpangadan & M. Suresh Babu, 2010. "Trade Liberalisation, Market Power abd Scale Efficiency in Indian Industry," Working Papers id:3142, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:3142
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    References listed on IDEAS

    as
    1. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
    2. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    3. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    4. 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.
    5. Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, vol. 36(1-2), pages 53-73, February.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Trade liberalisation; Market power; Scale Economies;

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