ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Concentration-Markup Relationship in Indian Manufacturing Sector

While the positive relationship between market concentration and price-cost margin or profitability is well documented in industrial organisation literature, the present paper makes an attempt to examine the concentration-markup relationship in Indian manufacturing sector in the post-liberalisation era using dynamic panel data model. It is observed that the traditional positive concentration-markup relationship does not hold in a dynamic context, when controlled for various structural aspects of the market, firms' strategies and policies of the government. In other words, industries with greater market concentration do not necessarily enjoy higher pcm in the long run, possibly due to entry of new firms, x-inefficiency of the incumbents and deceleration in industrial production.

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