Market Integration, Demand and the Growth of Firms: Evidence from a Natural Experiment in India / Robert T. Jensen, Nolan H. Miller.

Format:

Book

Author/Creator:

Jensen, Robert T.

Contributor:

National Bureau of Economic Research.

Miller, Nolan H.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24693.

NBER working paper series no. w24693

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Market Integration, Demand and the Growth of Firms

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

In many developing countries, the average firm is small, does not grow and has low productivity. Lack of market integration and limited information on non-local products often leave consumers unaware of the prices and quality of non-local firms. They therefore mostly buy locally, limiting firms' potential market size (and competition). We explore this hypothesis using a natural experiment in the Kerala boat-building industry. As consumers learn more about non-local builders, high quality builders gain market share and grow, while low quality firms exit. Aggregate quality increases, as does labor specialization, and average production costs decrease. Finally, quality-adjusted consumer prices decline.

Notes:

Print version record

June 2018.