Understanding the distribution of market power and the scope for industrial policy in emerging economies

 

          


Biography:

Simon Galle is a PhD Candidate in Economics at University of California, Berkeley. His dissertation research examines the intersection of industrial policy, macroeconomic growth, and market power. Currently, he is also collaborating on several projects in Kenya focusing on household financial behavior and inter-ethnic cooperation. He holds a Master in Economics from the Université Libre de Bruxelles and undergraduate degrees in Economics and Philosophy from K.U.Leuven.


Current Research Initiative as part of the PEDL project:

Understanding the distribution of market power and the scope for industrial policy in emerging economies

This research project aims to understand the dynamics of the distribution of market power, measured by mark-ups, and the implied scope for industrial policy. 

The author aims to develop a specific analysis of the relationship between firm profitability and firm growth in India. First, he will work on detecting any systematic relationship between these two variables empirically. If the data suggests that firm profitability robustly predicts firm growth, he will then disentangle and quantify the specific channels through which growth occurs. In particular the researcher will study three channels: (1) entry of new firms and reallocation, (2) innovation and introduction of new products, and (3) export-driven growth. If instead the data shows no evidence of a causal relationship between firm profitability and firm growth, the subsequent part of the study will focus on identifying the barriers that prohibit firm growth. To this end the author will develop a model of the interaction between input-level misallocation (e.g. resource misallocation due to financial constraints) and output-market misallocation (i.e. the distribution of mark-ups) and study how this interaction gives rise to a trade-off between input- and output-level misallocation. 

This study will contribute to improving our understanding of the misallocation of resources that is commonly observed in the manufacturing sector of developing countries.