Weekly Economics Seminar by Rahul Singh
January 29 @ 1:30 pm - 2:40 pm
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Title: Technical Regulations, Intermediate Inputs and Performance of Firms: Evidence from India
Speaker: Rahul Singh, PhD Candidate, IIM Bangalore
Abstract: We estimate the consequences of maintaining restrictive Technical Barriers to Trade (TBT) measures on physical efficiency and markups for manufacturing firms in India. We combine firm-product level production data from Prowess with the database of TBT measures that have been raised as a concern by member countries against India in the dedicated committees of WTO. We find that the incidence of restrictive TBT measures in an industry does not have a significant impact on productivity and markups. Higher TBT incidence on intermediate inputs to the industry, on the other hand, leads to a decrease in physical efficiency and markups for importers relative to non-importers. For a 10% increase in the incidence of TBTs in input share of output, a firm with import share at the 75th percentile suffers an additional decrease in productivity of 2% and markups of 1% compared to a firm with median import share. Firms absorb the increase in marginal costs by reducing markups with no significant increase in prices. The results are primarily driven by exporting firms and firms in less contract intensive industries.