Polarisation and reversion under competition: profitability of Indian firms
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Publication Date
2017-03Journal Title
International Journal of the Economics of Business
Publisher
Taylor & Francis
Taylor & Francis
Volume
24
Issue
2
Pages
131-151
Language
English
Type
Article
This Version
AM
Metadata
Show full item recordCitation
Kattuman, P. A., Jiang, N., & Kotia, A. (2017). Polarisation and reversion under competition: profitability of Indian firms. International Journal of the Economics of Business, 24 (2), 131-151. https://doi.org/10.1080/13571516.2017.1290750
Abstract
We analyse profitability dynamics in a large emerging economy, India, over the two-and-a-half decades since economic liberalisation began in earnest. We find that the average rate at which Indian firms reverted to normal profitability increased significantly, particularly for firms earning supernormal profits. In contrast, firms earning below-normal profitability have been marked by little reversion to normal. Inducing underperforming firms to improve their profitability is of great policy importance. The pattern in profitability dynamics of Indian firms in the early years was consistent with a polarised long-run profitability distribution. The polarisation tendency was reversed in later years, but the projected long-run profitability distribution has a substantial underperforming tail.
Keywords
intensity of competition, profitability dynamics, reversion, volatility, India, liberalisation
Embargo Lift Date
2018-09-13
Identifiers
External DOI: https://doi.org/10.1080/13571516.2017.1290750
This record's URL: https://www.repository.cam.ac.uk/handle/1810/263755
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