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Competition and Profitability in Indian Manufacturing Industries

K. PUSHPANGADAN and N. SHANTA
Indian Economic Review
New Series, Vol. 43, No. 1 (January-June 2008), pp. 103-123
Stable URL: http://www.jstor.org/stable/29793903
Page Count: 21
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Competition and Profitability in Indian Manufacturing Industries
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Abstract

The paper examines empirical evidence on the dynamic view of competition in Indian manufacturing industries using Mueller's auto-profit equations. The competitive profit rate for all industries is estimated to be 5% and the average firm-specific rent 4.2%. The observed average profit rate, 7.5%, is thus 50% higher than the competitive rate. The estimate of the average strength of competition in the manufacturing sector shows that it takes 0.9 years for the deviation of profit rates from the norm to reduce to its half level. Our results on the adjustment coefficient are found to be close to that of other studies for developed countries which are assumed to be competitive.

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