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Multi-product firms and product turnover in the developing world: Evidence from India. NBER Working Paper Series 14127 (2008)
| Citations: | 21 - 1 self |
BibTeX
@MISC{Goldberg08multi-productfirms,
author = {Penny Goldberg and Amit Khandelwal and Nina Pavcnik and Petia Topalova and Asia Pacific},
title = {Multi-product firms and product turnover in the developing world: Evidence from India. NBER Working Paper Series 14127},
year = {2008}
}
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Abstract
Recent theoretical work predicts that an important margin of adjustment to deregulation or trade reforms is the reallocation of output within firms through changes in their product mix. Empirical work has accordingly shifted its focus towards multi-product firms and their product mix decisions. Existing studies have however focused exclusively on the U.S. Using detailed firm-level data from India, we provide the first evidence on the patterns of multi-product firm production in a large developing country during a period (1989-2003) that spans large-scale trade and other market reforms. We find that in the cross-section, multi-product firms in India look remarkably similar to their U.S. counterparts, confirming the predictions of recent theoretical models. The time-series patterns however exhibit important differences. In contrast to evidence from the U.S., product churning – particularly product rationalization – is far less common in India. We thus find little evidence of “creative destruction”. We also find no link between declines in tariffs on final goods induced by Indian's 1991 trade reform and product dropping. The lack of product dropping is consistent with the role of industrial regulation in India, which, like in many other developing countries, may prevent an efficient allocation of resources.
Keyphrases
multi-product firm nber working paper series product turnover developing world trade reform product dropping creative destruction market reform little evidence multi-product firm production time-series pattern recent theoretical model u.s. counterpart industrial regulation empirical work important difference first evidence recent theoretical work efficient allocation important margin large-scale trade product mix decision u.s. using detailed firm-level data final good product rationalization product mix india look
