Product market competition and productivity in the Indian manufacturing industry

The effects of product market competition on the growth rates of productivity of firms in the Indian manufacturing sector are examined for the decade since the economic reform in 1991. This study improves on the construction of variables that capture the extent of product market competition. Empirical results indicate that the smaller is the market share of a firm, the higher is the productivity growth of the firm, and this effect is more prominent in a less concentrated market.