Management practices, competition, and multi-product firms in developing countries

Victor Gimenez Perales and Alina Mulyukova

No 2299, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We study how liberalization and competition affect firms' output and product scope depending on management practices. In a model of multi-product firms, we show that firms with better management practices specialize in fewer products with lower marginal costs. The model predicts that, under increased competition, firms with better management practices are less adversely affected by competition, especially in heterogeneous sectors. Evidence from India's de-reservation policy supports these predictions. Our simulations estimate a 0.29% welfare gain in India from the policy. The same policy could increase welfare by 0.39% in an environment with better management practices, such as the US, highlighting the management practices' role in liberalization outcomes.

Keywords: management practices; multi-product firms; de-reservation policy (search for similar items in EconPapers)
JEL-codes: D24 F61 L25 O12 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-com, nep-reg and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:325492

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