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 manrket power and/or an improvement in scale efficiency. We estimate a group-wise production function allowing for firm-efficiency. We estimate a group-wise production function allowing for firm-specific effects. A plausible estimate of market power is obtained and the assumption of constant 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 improvment in scale efficiency is not widespread across Indian manufacturing.
