There is a question in developing countries of whether firms tend to form geographic clusters in different markets in order to lower their costs an benefit from externalities in product promotion, or if they prefer to pioneer into new markets to avoid fierce competition. This study looks at the market for Potassium fertilizer in different districts of India between 2007 and 2013, as the market moved from a single government firm’s control to decentralization.
Specifically, this project will examine the process of entry by new private sector firms into the different districts and evaluate the factors affecting entry. The researcher will develop a dynamic model of firm entry and exit into distinct geographical markets, and draw on industrial organization to construct a model of strategic firm interactions in formerly monopolized markets.
As Potassium Chloride is an essential input for Indian agriculture, it is important to identify an optimal support mechanism for this market. This research will simulate policies in order to examine the effect of different measures on the evolution of market structure, and contribute to the ongoing debate on reforms to the Potassium fertilizer market.
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