Trade liberalisation, market power abd scale efficiency in Indian industry

Pulapre Balakrishnan, K. Pushpangadan and M. Suresh Babu
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Pulapre Balakrishnan: Centre for Development Studies
K. Pushpangadan: Centre for Development Studies
M. Suresh Babu: Centre for Development Studies

Centre for Development Studies, Trivendrum Working Papers from Centre for Development Studies, Trivendrum, India

Abstract: Using information on listed firms in each of the industry groups atthe two-digit level within Manufacturing this study investigates whetherthe radical shift in trade policy in India in 1991 resulted in a reductionin market power and/or an improvement in scale efficiency. We estimatea group-wise production function allowing for firm-specific effects. Aplausible estimate of market power is obtained and the assumption ofconstant returns to scale is mostly rejected. As regards the effects of thetrade-policy shock of 1991, evidence of a move to a more competitivemarket structure or of an improvement in scale efficiency is notwidespread across Indian manufacturing.

Keywords: Trade liberalisation; Market power; Scale Economies (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff
Date: 2002-08
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