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Multiproduct Firms, Product Scope and Productivity: Evidence from India’s Product Reservation Policy

Author

Listed:
  • Joshua Wilde

    () (Department of Economics, University of South Florida)

  • Ishani Tewari

    () (Yale School of Management)

Abstract

We provide novel evidence showing product scope dynamics within a firm is an important dimension of productivity growth. This channel is identified by leveraging the gradual dismantling of an Indian regulation that “reserved” hundreds of products for manufacture in the small-scale sector. Following the removal of these product market restrictions, product churning and productivity rose. Multiproduct firms who were never in the reserved sector drive this increase, suggesting that the reservation policy constrained their ability to achieve the optimal product mix. Our findings underscore the importance of incorporating heterogeneity at the product-firm level in assessing the impact of size-contingent regulation.

Suggested Citation

  • Joshua Wilde & Ishani Tewari, 2014. "Multiproduct Firms, Product Scope and Productivity: Evidence from India’s Product Reservation Policy," Working Papers 0214, University of South Florida, Department of Economics.
  • Handle: RePEc:usf:wpaper:0214
    as

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    References listed on IDEAS

    as
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    Cited by:

    1. Geoffrey Barrows & Helene Ollivier, 2016. "Emission intensity and firm dynamics: reallocation, product mix, and technology in India," GRI Working Papers 245, Grantham Research Institute on Climate Change and the Environment.
    2. Ghani,Syed Ejaz & Grover,Arti & Kerr,Sari & Kerr,William Robert, 2016. "Will market competition trump gender discrimination in India ?," Policy Research Working Paper Series 7814, The World Bank.

    More about this item

    Keywords

    Productivity; Multiproduct Firms; India; Dereservation; Products;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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