Recent studies concluded that economic reforms have not provided any clear evidence of increased competition, suggesting that monopoly has increased or remained the same. Since the traditional static measure of concentration is not a reliable indicator of the monopoly, static and dynamic measures of concentration are integrated to test the hypothesis. This paper makes an attempt to study 14 major Indian industries for which firm-level data are available for the period, 1989-2001. This integrated approach shows that the monopoly has: (i) increased in two industries; (ii) remained the same in two others; and (iii) reduced in the remaining ten industries. Out of these ten industries, in four industries large firms lost shares to other large and small firms and in two industries large firms lost shares only to small firms. In the remaining four cases, large firms lost shares only to other large firms implying that, competition was restricted to a particular group only. The study also clearly indicates that only by integrating static and dynamic measures the power of monopoly can be clearly assessed.

Several recent studies have come to the conclusion that economic reforms have not provided any clear evidence of increased competition1. But none of these studies have been able to capture the vigor of competition in an industry. This paper is an attempt in that direction. Such a study seems particularly important since one of the desired objectives of the structural reforms in India is to increase competition in Indian industry. The paper is divided into four sections. Section 1 discusses the literature. Section 2 deals with the scope, data and methodology. Section 3 gives the empirical results, followed by a summary and conclusions in the last section.

The purpose of this review is to find the appropriate method by which it is possible to assess the vigor of competition or the nature of share, cutting in an industry. “Economic theory suggests that upward mobility by new and/or small firms provides evidence that competitionexists in markets. Conversely, high or increasing stability constitutes some form of a priori demonstration that entry into the higher levels of an industry is blocked. In either case, mobility or lack of it would appear to have an impact upon the level of concentration”