Size distribution of manufacturing plants and development /

Size distribution of manufacturing plants and development /

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Bibliographic Details
Author / Creator:Kothari, Siddharth, author.
Imprint:[Washington, D.C.] : International Monetary Fund, ©2014.
Description:1 online resource (60 pages) : color illustrations
Language:English
Series:IMF working paper, 1018-5941 ; WP/14/236
IMF working paper ; WP/14/236.
Subject:
Factories -- India -- Econometric models.
Consumers -- India -- Econometric models.
Manufactures -- India -- Econometric models.
Industrial efficiency -- India -- Econometric models.
Consumers -- Econometric models.
Industrial efficiency -- Econometric models.
Manufactures -- Econometric models.
Supply and demand -- Econometric models.
India -- Supply and demand -- Econometric models.
India.
Electronic books.
Format: E-Resource Book
URL for this record:http://pi.lib.uchicago.edu/1001/cat/bib/12504206
Hidden Bibliographic Details
Other authors / contributors:International Monetary Fund. Research Department, issuing body.
ISBN:1498334393
9781498334396
9781498334396
Notes:"December 2014."
"Research Department."
Includes bibliographical references (pages 42-44).
Online resource; title from pdf title page (IMF.org Web site, viewed December 30, 2014).
Summary:The typical size distribution of manufacturing plants in developing countries has a thick left tail compared to developed countries. The same holds across Indian states, with richer states having a much smaller share of their manufacturing employment in small plants. In this paper, I explore the hypothesis that this income-size relation arises from the fact that low income countries and states have high demand for low quality products which can be produced efficiently in small plants. I provide evidence which is consistent with this hypothesis from both the consumer and producer side. In particular, I show empirically that richer households buy higher price goods while larger plants produce higher price products (and use higher price inputs). I develop a model which matches these cross-sectional facts. The model features non-homothetic preferences with respect to quality on the consumer side. On the producer side, high quality production has higher marginal costs and requires higher fixed costs. These two features imply that high quality producers are larger on average and charge higher prices. The model can explain about forty percent of the cross-state variation in the left tail of manufacturing plants in India.--Abstract.
Standard no.:10.5089/9781498334396.001
Table of Contents:
  • Cover; Contents; 1. Introduction; 2. Empirical Results; 2.1. Richer Households Buy Higher Price Goods; 2.2. Larger Plants Produce Higher Price Goods; 2.3. Larger Plants Use Higher Price Inputs; 3. Model; 3.1. Households; 3.2. Final Goods Producers; 3.3. Intermediate Goods Producers; 3.4. Equilibrium; 4. Calibration; 4.1. Production Parameters; 4.2. Utility Parameters; 5. Results; 5.1. Cross-section of Indian States; 5.2. India Over Time; 5.3. Parameter Sensitivity: Love of Variety; 5.4. Indian vs US; 6. Inter-State Trade; 7. Conclusion; References; A. Appendix.

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