Deregulation and Industrial Performance-The Indian Cement Industry

The Indian Cement Industry Subir Gokarn Rajendra Vaidya In this paper an attempt is made to evaluate the performance of the cement industry after decontrol. We find that the structure of the industry has undergone a qualitative change. The industry, after decontrol, is characterised by a competitive outcome in terms of price and profit performance. An enquiry into the nature of inter-firm heterogeneities suggests that major differences arise out of technical factors. The performance of firms across strategic groups is different, with firms operating relatively new and large plants appearing to have an advantage. The persistence of this performance differential is likely to depend on how quickly the strategies adopted by these firms is matched by the other firms.