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In the early 1990s, India removed the restrictions that prevented large firms from producing in a large number of sectors (about 70% of the products).
In the early 1990s, India removed the restrictions that prevented large firms from producing in a large number of sectors (about 70% of the products). After this restriction was lifted, the gap in the output per worker of large Indian firms vs. small Indian firms increased by about 50%. Why would the lifting of the restrictions on large firms have this effect? b. At the same time that the gap in the productivity of labor increased, the gap in the productivity of capital (revenue per assets) of large Indian firms decreased relative to small Indian firms. Why would the lifting of the restrictions have exactly the opposite effect on the gap in the productivity of capital between large and small firms
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