Market structure and technology: Their interdependence in Indian industry

A survey of 37 Indian industries shows that their market structures are competitive; they range from oligopolistic industries to industries with a large number of firms. The number of firms has been increasing in almost all industries. The paper classifies the market structures into four classes based on the degree of concentration and the coefficient of variation of market shares. A large number of small firms emerge in industries with two characteristics: namely, where technology is easily transferred within the country, and where buyers are sensitive to price and insensitive to quality. Industries with the opposite characteristics tend to be oligopolistic. The paper proposes a classification of the technological behaviour of firms on the basis of whether a firm produces more innovations than it uses or less, and whether its stimulus to innovation is scientific or economic.