Competitiveness and Concentration : Analogy or Chronology? A Study of Indian Manufacturing Sector Post New Economic Policy (1999-2013)

Abstract

The study analyzed the Indian manufacturing market structure with emphasis on the inherent differences between market concentration and monopoly power in the Indian manufacturing industry. To examine the market concentration, Hirschman Herfindahl and concentration ratio four indices were used. For monopoly power, Mark-up and Lerner's indices were used. This study used two digit and three-digit National Industrial Classification data from Centre for Monitoring Indian Economy, Prowess to determine the trends in market concentration and monopoly power in the manufacturing industry post economic reforms. The analysis showed that the growth rate of CR4 was more than the growth rate of HHI, indicating that the market was becoming increasingly skewed and biased towards big corporations. The study found a rising trend in market concentration but a fluctuating trend of monopoly power. Large firms grew in size every year post economic reforms, but mark-up pricing was cyclical and inconsistent. The policy implications of these findings for future discourse are discussed.