Entry, Competitiveness and Exports: Evidence from the Indian Firm Data

This paper attempts to evaluate the effects of industrial de-licensing of 1991 and WTO-induced tariff-reforms of 1995 on domestic competitiveness and export performances of the Indian manufacturing during the post-1991. Unlike existing empirical studies not backed by theoretical underpinnings, the paper has been founded on an open-economyoligopoly-model framework. The paper develops an econometric method of estimating the output from data on sales of the firms, thereby estimating the firms' marginal cost, which is conducive for the entire empirical analysis with a unified set of firm data. Using firm level data for 14 sectors for the period 1990-2008, it is observed that there has been an increase in the number of firms resulting in a fall in the concentration ratio and elasticity of demand at the point of equilibrium is generally less than unity and is declining over-time. The panel regression results of increasing exports by bigger firms also conforms the theoretical predictions.