Impact of Market Structure and Performance on Research and Development in Indian Automobile Industry

Abstract

Automobile industry is one of the leading industries in India which contributes roughly five per cent of India's GDP. It is growing at a tremendous pace with increasing demand from within the country as well as outside. Due to liberalization, some multinationals have come to capture the Indian market and as a result of this, technological development takes place through research and development. The objectives of the paper are to examine whether the Indian industry is competitive or not and to examine the impact of industrial performance and market structure on research and development. This paper also shows the Schumpeterian inverted U relationship between research and development intensity, and market concentration research and development are affected not only by the last year's profitability but also by market structure. It is based on company level panel data of 19 years from 1990 to 2008 collected from secondary sources.