Free entry in the Indian automobile industry: a calibration model

Paul Jensen and Kala Krishna ()

The Journal of International Trade & Economic Development, 1999, vol. 8, issue 4, 437-455

Abstract: We examine the implications of free entry in the Indian automobile industry in a model that is calibrated to the Indian market using price, cost and production data from 1993 and 1994. In particular, we consider the effect that free entry has on prices, production levels and welfare. We have two main findings. First, that despite the experiences of other countries, free entry is a desirable policy in this market. Second, that the excise tax of 40 per cent levied on automobiles does not seem to have a major adverse impact on welfare.

Keywords: Entry; calibration; industrial policy; product differentiation; automobiles; India (search for similar items in EconPapers)
Date: 1999
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DOI: 10.1080/09638199900000026

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