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E-book
Author Kothari, Siddharth, author

Title Size distribution of manufacturing plants and development / prepared by Siddharth Kothari
Published [Washington, D.C.] : International Monetary Fund, ©2014

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Description 1 online resource (60 pages) : color illustrations
Series IMF working paper, 1018-5941 ; WP/14/236
IMF working paper ; WP/14/236.
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
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
Notes "December 2014."
"Research Department."
Bibliography Includes bibliographical references (pages 42-44)
Notes Online resource; title from pdf title page (IMF.org Web site, viewed December 30, 2014)
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
SUBJECT India -- Supply and demand -- Econometric models
Subject India
Form Electronic book
Author International Monetary Fund. Research Department, issuing body.
ISBN 1498334393
9781498334396
9781498301879
1498301878