Incumbents and Protectionism: Firm-Level Evidence from India

37 Pages Posted: 20 Mar 2005

See all articles by Anusha Chari

Anusha Chari

University of North Carolina (UNC) at Chapel Hill - Department of Economics; National Bureau of Economic Research (NBER); University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Nandini Gupta

Indiana University - Kelley School of Business - Department of Finance

Date Written: March 2005

Abstract

In this paper, we focus on the concentrated control of corporate assets and the ownership of incumbent firms to examine the selective removal of foreign entry restrictions in India. The results show that the probability of entry deregulation is negatively correlated with industry concentration and in industries where a few large firms are highly profitable. The data also suggest that the government is significantly less likely to relax entry barriers in industries with state-owned enterprises. Moreover, business group presence does not appear to influence the probability of entry deregulation in industries with no state-owned enterprises. The evidence confirms that entry barriers are designed to protect incumbents and suggests that firm level data provide a useful tool to examine the relative influence of different groups of incumbents in the regulatory process.

Keywords: entry dergulation, industry concentration, incumbents, ownership

JEL Classification: D7, F00, L51

Suggested Citation

Chari, Anusha and Gupta, Nandini, Incumbents and Protectionism: Firm-Level Evidence from India (March 2005). Available at SSRN: https://ssrn.com/abstract=686484 or http://dx.doi.org/10.2139/ssrn.686484

Anusha Chari (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

McColl Building
Chapel Hill, NC 27599-3490
United States

Nandini Gupta

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3416 (Phone)
812-855-5875 (Fax)

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