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Concentration
and Market Structure A Case Study of Dominant Firms with
Fringe Competition in Indian Industry --K Pushpangadan and N Shanta
Several
recent studies have come to the conclusion that economic
reforms have not provided any clear evidence of increased
competition or improved efficiency in Indian industry suggesting
that concentration would have increased or remained the
same. While all these studies have dealt with the static
aspects of performance, the dynamic aspects of competitiveness
such as growth and mobility of firms have not been looked
into. This paper is an attempt to fill this gap. More specifically
it analyses the growth and mobility of firms in the Food
Products Industry in India, one in which there has been
maximum entry of new firms in the 90s-the post-liberalization
period. The study shows that in the Food Products industry
competition, measured in terms of average shifting, in general
has declined over time implying that concentration has increased
following economic reforms. But it is also seen that competition
in terms of mobility not only exists but has also increased
over time among the lower size classes of firms. The analysis
helps to establish that the Food Products industry in India
is a typical case of dominant - firm-with-fringe competition.
More importantly, the study identifies a market structure,
which is consistent with a situation where overall concentration
can increase, and yet not mean that there is no competition.
The study also shows that in terms of methodology, it is
only through a size-wise dynamic analysis that one can confirm
if competition exists when there is overall concentration.
This case study also provides a link between the size distribution
of firms and market structure.
© IUP. All Rights Reserved
Sources
of TFP Growth in Indian Sunrise Industries: A Stochastic
Frontier Approach --Mukesh Kumar and Partha Basu
This
study analyzes the sources of productivity growth in Indian
Sunrise Industries during the period spanning 1975-76 to
1992-93. The technique of parametric frontier production
function is used to decompose the Total Factor Productivity
(TFP) growth into two different sources, viz., neutral technological
progress and technical efficiency change under the assumption
of constant returns to scale. The breaking of the whole
period into three-yearly sub-periods shows that the pattern
of productivity growth and its different components are
not alike in all the sub-periods. Though, the technological
progress is the dominating source of productivity growth,
the importance of efficiency change cannot be ignored in
these industries. The increasing inefficiencies are the
order of these industries in recent years. There has been
perceptible movement of the frontier in Indian Sunrise Industries
after 1984-85, which indicates the success in improvement
planning and implementation to allow for acquisition of
new technology. In spite of higher rate of technological
change, the productivity growth was found much below the
expectation in these industries, mainly because of loss
in efficiency.
© IUP. All Rights Reserved
R&D
in Indian Manufacturing Sector and its Determinants --K S Sujit
It
is well established that Research and Development (R&D)
activities play an important role in productivity and growth
of industries. The decision to allocate funds for R&D activity
is a crucial one for any firm and is influenced by many
factors that include market structure, nature of the product,
performance of the industry etc. As the outcome of the R&D
activity is uncertain and involves risk, industries that
are averse to risk tend to invest in adaptive R&D activities.
This is generally carried out through the import of known
technologies and adapting them to suit local needs. Innovative
R&D, on the other hand, is reflected by the number of patents
filed and/or granted and is usually import displacing. This
paper investigates the nature and determinants of selected
Indian industries in a period when the liberalization of
the Indian economy was well under way. The results show
that while there was steep rise in R&D activities after
the liberalization package introduced during 1885-86 period
and more extensively during 1990-91 period, much of in-house
R&D activity turns out to be adaptive in rather than innovative
in nature. The determinants of R&D in different industry
groups differ a lot indicating that the decision to undertake
R&D is industry specific. Nevertheless there are some variables,
which show similar impact on R&D decisions.
© IUP. All Rights Reserved
Economic
Efficiency and Value Maximization in Banking Firms --Ana Isabel Fernández, Fernando Gascón and Eduardo
González
We
study economic efficiency in 142 financial intermediaries
from 18 countries over the period 1989-1998 and the relationship
between efficiency, productivity change and shareholders'
wealth maximization. A non-parametric frontier analysis
(DEA) is applied to estimate the relative efficiency of
commercial banks of different geographical areas. A Malmquist
decomposition is then carried out in order to separate efficiency
change from technical change. We evaluate the relationship
between economic efficiency and wealth maximization. Results
show different productivity patterns among three geographical
areas (North America, Japan and Europe) over the sample
period. The estimates of economic efficiency and productivity
changes are consistent with the wealth maximization criterion.
© Ana Isabel Fernández, Fernando Gascón and Eduardo González
(www.ssrn.com) Reprinted with permission.
Lagging
Productivity Growth in the Service Sector: Mismeasurement,
Mismanagement or Misinformation? --Dinah Maclean
While
the service sector has been growing rapidly as a share of
total output, aggregate productivity growth has generally
lagged behind that of the goods sector. In this report,
the author assesses a range of explanations for lagging
service sector productivity growth. Measurement problems
appear to be greater in services than in goods, and a detailed
analysis of output measurement in the three service industries
experiencing the lowest productivity growth suggests that
underestimation is likely significant in finance, insurance
and real estate, community, business and personal services,
and trade. A lower level of competition in services compared
with goods may also have affected productivity growth, though
this impact is very hard to quantify. Explanations based
on the service sector's relatively greater investment in
new technology, however, are found to account at best for
lagging productivity growth only in the last decade. Finally,
the hypothesis that service industries are incapable of
high productivity growth because of their labor-intensive
nature is shown to be inapplicable to much of the service
sector. The report concludes by considering which service
industries are showing the greatest growth. It is found
that much of the increased service-sector output has been
in areas that have shown relatively strong productivity
growth, or where problems of measurement are particularly
severe. Moreover, there is considerable potential for greater
productivity growth in areas that may have shown slower
productivity increases in the past, because of such factors
as technological change and ongoing adjustments to past
deregulation.
© Dinah Maclean (www.ssrn.com) Reprinted with permission.
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