Product Scope and Productivity: Evidence from India's Product Reservation Policy.

Protections for small enterprises are commonplace in developing countries. How do these policies affect overall industrial performance? Using exogenous variation in the timing of an Indian policy dismantling laws that "reserved" certain products for exclusive manufacture by small firms, we identify...

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Publicado en:Southern Economic Journal Vol. 86; no. 1; pp. 339 - 363
Autores principales: Tewari, Ishani, Wilde, Joshua
Formato: Artículo
Publicado: Wiley-Blackwell Jul2019
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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        atl: Product Scope and Productivity: Evidence from India's Product Reservation Policy.
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        au:
          Tewari, Ishani
          Wilde, Joshua
      su:
        India
        Industrial productivity
        Multiproduct firms
        Product lines
        Manufactured products
        Developing countries
      sug:
        subj:
          Industrial productivity
          India
          All other miscellaneous manufacturing
          All Other Miscellaneous Manufacturing
          Multiproduct firms
          Product lines
          Manufactured products
          Developing countries
      keyword:
        L5
        O1
        O25
        O4
        L5
        O1
        O25
        O4
      ab: Protections for small enterprises are commonplace in developing countries. How do these policies affect overall industrial performance? Using exogenous variation in the timing of an Indian policy dismantling laws that "reserved" certain products for exclusive manufacture by small firms, we identify the effect of the dereservation policy on size, productivity, product churning, and other industry dynamics. Following the change, we find that firms significantly altered their product lines, leading to the reallocation of productive factors, increasing exits, and increasing total factor productivity. These effects were driven by new entrants moving into the formerly restricted product space, and in particular by multiproduct firms. Our findings underscore the importance of intrafirm heterogeneity on the impact of size‐contingent regulations, as firms' product line dynamics can be an important dimension of productivity growth.
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    language: English
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