ADJUSTMENT OF PRICING: EVIDENCE FROM INDIAN MANUFACTURING

Abstract

In India, manufacturing plays a significant role in economic development, growth and as a source of employment. This paper analyses the pricing behaviour in Indian manufacturing sector considering both domestic and external variables. Price adjustment models are developed based on Industrial Organization literature and are examined with 28 manufacturing industries at the 3-digit level over the period from 1963 to 2001. Domestic structural factors are found to be important in determining speed of price adjustment.Speed of price adjustment; Competitiveness; Indian manufacturing