Infrastructure regulation and reallocations within industry: Theory and evidence from Indian firms
- 作者：Juan Pablo Rud ; juan.rud@rhul.ac.uk
- 关键词：Infrastructure ; Regulation ; Industrial development ; Firms behavior ; Industry equilibrium
- 刊名：Journal of Development Economics
- 出版年：2012
- 期刊代码：62_03043878
- 类别：soc
- 出版时间：September, 2012
- 卷：99
- 期：1
- 页码：116-127
- 文件大小：288 K
摘要
Many firms in developing countries adopt captive power generators to deal with expensive and unreliable supply of electricity. I present a model that combines upstream regulation with downstream heterogeneous firms in a monopolistic competition framework, where firms can pay a fixed cost to adopt this marginal cost-reducing device. The presence of captive power affects the market equilibrium by increasing the level of idiosyncratic productivity a firm needs to survive in the market and by re-allocating sales and profits towards the more productive, adopting firms. Additionally, the rate of adoption is shown to increase with the price of electricity, industries' electricity-intensity and with higher barriers to firm entry. The mechanisms I propose are present for a cross-section of Indian firms.