Identifying the Aggregate Productivity Effects of Entry and Size Restrictions: An Empirical Analysis of License Reform in India

Distortions in the allocation of resources between heterogeneous producers have the potential to generate large reductions in aggregate productivity, a point that has been stressed by recent studies. There is, however, little direct empirical evidence from actual policy experiments on the magnitude...

Full description

Saved in:
Bibliographic Details
Published inAmerican economic journal. Economic policy Vol. 3; no. 2; pp. 66 - 96
Main Author Chari, A. V
Format Journal Article
LanguageEnglish
Published American Economic Association 01.05.2011
Subjects
Aggregates
Costs
Economic policy
Equilibrium
Factories
Licenses
Licensing
Manufacturing
Production functions
Productivity
Technology adoption
Online AccessGet full text

Cover

More Information
Summary:Distortions in the allocation of resources between heterogeneous producers have the potential to generate large reductions in aggregate productivity, a point that has been stressed by recent studies. There is, however, little direct empirical evidence from actual policy experiments on the magnitude of these effects. This paper proposes a simple methodology that empirically identifies the separate effects of entry and size restrictions on aggregate productivity, and uses it to analyse the impact of a policy reform in India. (JEL L11, L24, O14, O47)
ISSN:1945-7731
1945-774X
DOI:10.1257/pol.3.2.66