Pub Date : 2022-12-14DOI: 10.1177/00194662221137266
Rochna Arora, B. Kaur
Taking the data for 17 Indian states for the period running 1991–2017, the study investigates relationship between infrastructure and manufacturing value added at the overall as well as segregated levels to study the spatial differences. Preliminary tests of cross-section dependence point to the existence of dependence among the cross sections after which second-generation testing procedures are applied. Spatial differential impact of infrastructure on the performance of manufacturing activity is estimated using fixed/random effect modelling. The empirical results show that infrastructure index exerts positive and significant impact on the manufacturing performance with estimate of 0.20 for all states in India and 0.49 for high-income states. Similarly, individual components of infrastructure influence manufacturing activity differently. Road infrastructure is influencing manufacturing performance negatively in high-income states while it is positive for other states; teledensity exerts positive influence in case of middle-income states while the impact is negative in case of low-income states. Dumitrescu and Hurlin’s causality test shows bidirectional causality from infrastructure to manufacturing output. JEL Codes: D02, E62, H54, L94, L96
{"title":"Core Infrastructure and Manufacturing Activity in the Indian States: Does the Income Group Matter?","authors":"Rochna Arora, B. Kaur","doi":"10.1177/00194662221137266","DOIUrl":"https://doi.org/10.1177/00194662221137266","url":null,"abstract":"Taking the data for 17 Indian states for the period running 1991–2017, the study investigates relationship between infrastructure and manufacturing value added at the overall as well as segregated levels to study the spatial differences. Preliminary tests of cross-section dependence point to the existence of dependence among the cross sections after which second-generation testing procedures are applied. Spatial differential impact of infrastructure on the performance of manufacturing activity is estimated using fixed/random effect modelling. The empirical results show that infrastructure index exerts positive and significant impact on the manufacturing performance with estimate of 0.20 for all states in India and 0.49 for high-income states. Similarly, individual components of infrastructure influence manufacturing activity differently. Road infrastructure is influencing manufacturing performance negatively in high-income states while it is positive for other states; teledensity exerts positive influence in case of middle-income states while the impact is negative in case of low-income states. Dumitrescu and Hurlin’s causality test shows bidirectional causality from infrastructure to manufacturing output. JEL Codes: D02, E62, H54, L94, L96","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"10 1","pages":"895 - 911"},"PeriodicalIF":0.0,"publicationDate":"2022-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"64818149","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-12-14DOI: 10.1177/00194662221137261
Rahul Kumar, Prasenjit Chakrabarti
This article investigates the spot market’s short-term price reaction on derivatives listing and delisting in India. We comprehensively examine the derivatives listing and delisting with extended time-series data from 2001-2020. We employ event study methodology and find that stocks show positive price reactions on the inclusion, whereas, on the exclusion, stocks show adverse price reactions. In addition, we validate our findings by considering the announcement date and actual date as our event date. We also examine the cross-sectional drivers of cumulative abnormal returns. We find that the underlying liquidity and volatility are critical drivers of cumulative abnormal returns. We produce evidence that derivatives listing (delisting) around the event window significantly increases (decreases) the prices of its underlying. The study attempt to contribute to option listing literature by analyzing the firm-specific cross-sectional drivers of cumulative abnormal returns. JEL Codes: G11,G12,G14
{"title":"Price Impact of Derivatives Listing and Delisting: Evidence from India","authors":"Rahul Kumar, Prasenjit Chakrabarti","doi":"10.1177/00194662221137261","DOIUrl":"https://doi.org/10.1177/00194662221137261","url":null,"abstract":"This article investigates the spot market’s short-term price reaction on derivatives listing and delisting in India. We comprehensively examine the derivatives listing and delisting with extended time-series data from 2001-2020. We employ event study methodology and find that stocks show positive price reactions on the inclusion, whereas, on the exclusion, stocks show adverse price reactions. In addition, we validate our findings by considering the announcement date and actual date as our event date. We also examine the cross-sectional drivers of cumulative abnormal returns. We find that the underlying liquidity and volatility are critical drivers of cumulative abnormal returns. We produce evidence that derivatives listing (delisting) around the event window significantly increases (decreases) the prices of its underlying. The study attempt to contribute to option listing literature by analyzing the firm-specific cross-sectional drivers of cumulative abnormal returns. JEL Codes: G11,G12,G14","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49645297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-12-13DOI: 10.1177/00194662221137264
Pinku Paul, Paroma Mitra
The article analytically investigates the association between GDP growth and steel consumption in India from 2004–2005 to 2019–2020. We investigate the association of both long-term and short-term by employing the Granger causality test in the vector error correction model. The results showed one-way causality between economic growth to steel consumption both in the long and short run and concludes that over the period there is a unidirectional movement from economic development to steel consumption. So, as the economy progresses it has a direct impact on the steel industry. Finally, the study forecast the steel demand for the next decade and highlights the readiness of the steel industry to meet its demand and focus on better utilisation of its capacity. JEL Codes: C51, E2, E27
{"title":"Revisiting Economic Growth and Steel Consumption: Evidence from India","authors":"Pinku Paul, Paroma Mitra","doi":"10.1177/00194662221137264","DOIUrl":"https://doi.org/10.1177/00194662221137264","url":null,"abstract":"The article analytically investigates the association between GDP growth and steel consumption in India from 2004–2005 to 2019–2020. We investigate the association of both long-term and short-term by employing the Granger causality test in the vector error correction model. The results showed one-way causality between economic growth to steel consumption both in the long and short run and concludes that over the period there is a unidirectional movement from economic development to steel consumption. So, as the economy progresses it has a direct impact on the steel industry. Finally, the study forecast the steel demand for the next decade and highlights the readiness of the steel industry to meet its demand and focus on better utilisation of its capacity. JEL Codes: C51, E2, E27","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44715168","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-12-09DOI: 10.1177/00194662221137265
Sanjana Mehta
In September 2020, through a voice vote in the Rajya Sabha, the Indian Parliament passed the infamous three farm bills. This triggered a series of protests and resistance that manifested in one of the world’s biggest displays of dissent. A lot has been said about the intent and potential impact of the farm bills. India is a majorly agricultural economy, so not only do these farm bills hold the potential to disrupt our economy, the protests it has triggered are further indicative of a radical change. This article breaks down the intent of the now-repealed legislation, its potential impact on the economy, positive and negative, and how the resultant protests have impacted a country headed towards a recessionary period. The article marks battles won and lost, and paves a potential path forward. JEL Code: E6
{"title":"Farm Laws: Regulation-revolution?—Assessing the Need, Intent and Impact of the New Farm Laws from an Economic Perspective","authors":"Sanjana Mehta","doi":"10.1177/00194662221137265","DOIUrl":"https://doi.org/10.1177/00194662221137265","url":null,"abstract":"In September 2020, through a voice vote in the Rajya Sabha, the Indian Parliament passed the infamous three farm bills. This triggered a series of protests and resistance that manifested in one of the world’s biggest displays of dissent. A lot has been said about the intent and potential impact of the farm bills. India is a majorly agricultural economy, so not only do these farm bills hold the potential to disrupt our economy, the protests it has triggered are further indicative of a radical change. This article breaks down the intent of the now-repealed legislation, its potential impact on the economy, positive and negative, and how the resultant protests have impacted a country headed towards a recessionary period. The article marks battles won and lost, and paves a potential path forward. JEL Code: E6","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"71 1","pages":"768 - 772"},"PeriodicalIF":0.0,"publicationDate":"2022-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43437376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-12-07DOI: 10.1177/00194662221139515
Valerio Benedetto, D. Cadilhac, J. Spencer, A. Clegg, C. Lightbody, P. Maulik, Madakasira Vasantha, P. Srivastava, J. Pandian, P. N. Sylaja, C. Watkins
The incidence of stroke in India is one of the largest worldwide. With this scoping review, we assessed the evidence on the costs of stroke, which is essential to evaluate whether stroke care interventions are cost-effective. We adopted a healthcare sector and broader societal perspective and searched electronic databases for records including stroke cost estimates (up to 2020). Following deduplication and screening of 2,510 records, we extracted the data (converted into 2020 Indian rupees [INR]) and assessed the quality of eight eligible studies. These studies, published between 2011 and 2020, covered the whole of India and specific localities and were: cost-of-illness studies (n = 3); economic evaluations (n = 2); cross-sectional costing study (n = 1); simulated costing study (n = 1); and policy/clinical review (n = 1). Among the extracted estimates, the mean total costs of stroke care per patient for the period up to six months post admission ranged from ₹19,428.86 in a government hospital in Punjab to ₹118,040.15 in a private tertiary care centre in Ludhiana. The median total out-of-pocket (OOP) payments for cardiovascular disease-related expenditures ranged from ₹18,148.88 to ₹68,464.39 across different income groups. Despite methodological limitations, the data from our scoping review will help in designing economic evaluations of stroke care interventions in India. JEL Codes: C18, C80, D61, I15, I19
{"title":"Costs of Hospital Care for Strokes in India: A Scoping Review","authors":"Valerio Benedetto, D. Cadilhac, J. Spencer, A. Clegg, C. Lightbody, P. Maulik, Madakasira Vasantha, P. Srivastava, J. Pandian, P. N. Sylaja, C. Watkins","doi":"10.1177/00194662221139515","DOIUrl":"https://doi.org/10.1177/00194662221139515","url":null,"abstract":"The incidence of stroke in India is one of the largest worldwide. With this scoping review, we assessed the evidence on the costs of stroke, which is essential to evaluate whether stroke care interventions are cost-effective. We adopted a healthcare sector and broader societal perspective and searched electronic databases for records including stroke cost estimates (up to 2020). Following deduplication and screening of 2,510 records, we extracted the data (converted into 2020 Indian rupees [INR]) and assessed the quality of eight eligible studies. These studies, published between 2011 and 2020, covered the whole of India and specific localities and were: cost-of-illness studies (n = 3); economic evaluations (n = 2); cross-sectional costing study (n = 1); simulated costing study (n = 1); and policy/clinical review (n = 1). Among the extracted estimates, the mean total costs of stroke care per patient for the period up to six months post admission ranged from ₹19,428.86 in a government hospital in Punjab to ₹118,040.15 in a private tertiary care centre in Ludhiana. The median total out-of-pocket (OOP) payments for cardiovascular disease-related expenditures ranged from ₹18,148.88 to ₹68,464.39 across different income groups. Despite methodological limitations, the data from our scoping review will help in designing economic evaluations of stroke care interventions in India. JEL Codes: C18, C80, D61, I15, I19","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"71 1","pages":"864 - 877"},"PeriodicalIF":0.0,"publicationDate":"2022-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45072476","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-12-01DOI: 10.1177/00194662221136007
K. Aggarwal
It is well established that consuming groundwater contaminated with arsenic can lead to diseases of the heart, blood vessels, peripheral nervous systems and skin diseases such as pigmentation change. In this article, I focus on two health outcomes—skin diseases and still births—using district-level data from India, a country with widespread arsenic contamination. Arsenic may come into human contact via direct and/or indirect channel. I intend to examine these two channels of arsenic transmission. To analyse the two-fold objectives of this study, I have used repeated cross-section data from the two health rounds of National Sample Survey Organization (60th and 71st round survey). I find a positive and statistically significant relation between skin diseases and drinking water from arsenic contaminated tube well. Similar results are found for still birth in arsenic affected areas, even after controlling for state- and district-level factors. Using odds ratio, I also find positive effect of rice consumption on skin manifestations, robust to state-fixed effects, but not district-fixed effects. Individuals are more adversely affected in terms of skin lesions and adverse pregnancy outcomes. Drinking arsenic contaminated water is a more dominant pathway than consumption of food containing arsenic, particularly rice and wheat. JEL Codes: I10, I12, Q25, Q53, Q54
{"title":"Effect of Arsenic on Health: Evidence from Indian Districts","authors":"K. Aggarwal","doi":"10.1177/00194662221136007","DOIUrl":"https://doi.org/10.1177/00194662221136007","url":null,"abstract":"It is well established that consuming groundwater contaminated with arsenic can lead to diseases of the heart, blood vessels, peripheral nervous systems and skin diseases such as pigmentation change. In this article, I focus on two health outcomes—skin diseases and still births—using district-level data from India, a country with widespread arsenic contamination. Arsenic may come into human contact via direct and/or indirect channel. I intend to examine these two channels of arsenic transmission. To analyse the two-fold objectives of this study, I have used repeated cross-section data from the two health rounds of National Sample Survey Organization (60th and 71st round survey). I find a positive and statistically significant relation between skin diseases and drinking water from arsenic contaminated tube well. Similar results are found for still birth in arsenic affected areas, even after controlling for state- and district-level factors. Using odds ratio, I also find positive effect of rice consumption on skin manifestations, robust to state-fixed effects, but not district-fixed effects. Individuals are more adversely affected in terms of skin lesions and adverse pregnancy outcomes. Drinking arsenic contaminated water is a more dominant pathway than consumption of food containing arsenic, particularly rice and wheat. JEL Codes: I10, I12, Q25, Q53, Q54","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"71 1","pages":"420 - 433"},"PeriodicalIF":0.0,"publicationDate":"2022-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42355014","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-11-30DOI: 10.1177/00194662221139008
S. Bhushan
{"title":"Editorial","authors":"S. Bhushan","doi":"10.1177/00194662221139008","DOIUrl":"https://doi.org/10.1177/00194662221139008","url":null,"abstract":"","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"70 1","pages":"557 - 558"},"PeriodicalIF":0.0,"publicationDate":"2022-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42369869","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-10-14DOI: 10.1177/00194662221118310
S. Mukherjee
In order to revive the agricultural sector under the neoliberal regime, contract farming has been emerging as a new agricultural technology in India and in the state of West Bengal, in particular. The present paper is a micro-level comparative study of West Bengal, dominated mainly by small and marginal farmers, which serves as an interesting case for highlighting on the pattern of cropping changes over time. The study highlights on the contract farming models prevailing in the study area, the specific implications of the nature of contracts followed by a detailed discussion on the characteristics of the crop under contract and the structure of contract farming in the study area. The article also attempts to investigate the factors inducing contract farming by different size classes of farmers as well as contract farming through individual agents vis-a-vis cooperatives using a logistic regression model. The study reflects that the success of contract farming as an emerging alternative institution that may alter the existing farm practices as suggested by the recent Farm Bill, 2020, depends much on the nature of the product as well as the contract. JEL Codes: Q12; Q13; Q15; Y10.
{"title":"Contract Farming in West Bengal: Patterns, Determinants and Policy Implications","authors":"S. Mukherjee","doi":"10.1177/00194662221118310","DOIUrl":"https://doi.org/10.1177/00194662221118310","url":null,"abstract":"In order to revive the agricultural sector under the neoliberal regime, contract farming has been emerging as a new agricultural technology in India and in the state of West Bengal, in particular. The present paper is a micro-level comparative study of West Bengal, dominated mainly by small and marginal farmers, which serves as an interesting case for highlighting on the pattern of cropping changes over time. The study highlights on the contract farming models prevailing in the study area, the specific implications of the nature of contracts followed by a detailed discussion on the characteristics of the crop under contract and the structure of contract farming in the study area. The article also attempts to investigate the factors inducing contract farming by different size classes of farmers as well as contract farming through individual agents vis-a-vis cooperatives using a logistic regression model. The study reflects that the success of contract farming as an emerging alternative institution that may alter the existing farm practices as suggested by the recent Farm Bill, 2020, depends much on the nature of the product as well as the contract. JEL Codes: Q12; Q13; Q15; Y10.","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"70 1","pages":"670 - 684"},"PeriodicalIF":0.0,"publicationDate":"2022-10-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49053551","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-10-11DOI: 10.1177/00194662221118331
Anusree Paul, A. Barua
The bulk of the world trade in commodities now a days consist of intermediate goods, which play an essential role in production and creation of value-added. As a consequence, the global production process is getting much more integrated today than ever before. To understand and examine this internationalisation in Indian manufacturing industries, using World Input–Output Database (WIOD), we have estimated the foreign and domestic value-added contents in export and output of Indian manufacturing for the period 2000 to 2014. Further, to complement this analysis, we have also performed regression estimations to identify the relationship between export, imported inputs use, and output growth of Indian manufacturing industries. Our study reveals low usage of domestic inputs use and more usage of imported inputs. These indicate stronger backward linkages in production and weak forward linkages in global consumption and production networks. Regression analysis also strengthens the finding of higher backward participation of the manufacturing sector. We have employed panel vector error correction model, fully modified ordinary least square and dynamic OLS models. Our results reveal a robust long-run causality between imported inputs usage and export-growth of the sector. JEL Codes: C33, C67, F14, F15
{"title":"Trade Integration and Production Disintegration of Manufacturing Industries: India in Global Platform","authors":"Anusree Paul, A. Barua","doi":"10.1177/00194662221118331","DOIUrl":"https://doi.org/10.1177/00194662221118331","url":null,"abstract":"The bulk of the world trade in commodities now a days consist of intermediate goods, which play an essential role in production and creation of value-added. As a consequence, the global production process is getting much more integrated today than ever before. To understand and examine this internationalisation in Indian manufacturing industries, using World Input–Output Database (WIOD), we have estimated the foreign and domestic value-added contents in export and output of Indian manufacturing for the period 2000 to 2014. Further, to complement this analysis, we have also performed regression estimations to identify the relationship between export, imported inputs use, and output growth of Indian manufacturing industries. Our study reveals low usage of domestic inputs use and more usage of imported inputs. These indicate stronger backward linkages in production and weak forward linkages in global consumption and production networks. Regression analysis also strengthens the finding of higher backward participation of the manufacturing sector. We have employed panel vector error correction model, fully modified ordinary least square and dynamic OLS models. Our results reveal a robust long-run causality between imported inputs usage and export-growth of the sector. JEL Codes: C33, C67, F14, F15","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"70 1","pages":"685 - 706"},"PeriodicalIF":0.0,"publicationDate":"2022-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49449322","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-01DOI: 10.1177/00194662221118311
Mohina Saxena, Surajit Bhattacharyya
We address the strategic interdependence among capital structure, firm-level (process) innovation, and subsequent output decisions. In the backdrop of the limited liability effect, the interlinkage among financial and real variables is established through a three-stage game. The levered duopolist produces higher output and earns a larger profit than its unlevered counterpart. Even the industry output is higher when one of the duopolists is levered. However, if the levered duopolist undertakes investment in (process) innovation, then the debt-financed innovation induced output is larger than the innovation-led output of a completely equity financed firm. The levered innovative firm eventually becomes a monopolist by driving out the unlevered innovative duopolist. JEL Codes: D21, G32, L13, O31
{"title":"Financial Leverage, Innovation and Cournot Output: Limited Liability Effect Under Demand Uncertainty","authors":"Mohina Saxena, Surajit Bhattacharyya","doi":"10.1177/00194662221118311","DOIUrl":"https://doi.org/10.1177/00194662221118311","url":null,"abstract":"We address the strategic interdependence among capital structure, firm-level (process) innovation, and subsequent output decisions. In the backdrop of the limited liability effect, the interlinkage among financial and real variables is established through a three-stage game. The levered duopolist produces higher output and earns a larger profit than its unlevered counterpart. Even the industry output is higher when one of the duopolists is levered. However, if the levered duopolist undertakes investment in (process) innovation, then the debt-financed innovation induced output is larger than the innovation-led output of a completely equity financed firm. The levered innovative firm eventually becomes a monopolist by driving out the unlevered innovative duopolist. JEL Codes: D21, G32, L13, O31","PeriodicalId":85705,"journal":{"name":"The Indian economic journal : the quarterly journal of the Indian Economic Association","volume":"70 1","pages":"655 - 669"},"PeriodicalIF":0.0,"publicationDate":"2022-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44542791","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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