Trade Restrictions, Competition, and Firm Behavior: India's Experience in the US Market in the Post-MFA Era

Employing a difference-in-differences estimation technique on firm and product level data on Indian textile and clothing exports to the US over 2000 to 2010, we find that MFA quota removal was associated with a rise in export revenues, sales, and total assets of constrained products relative to unconstrained products. We find that the rise in export revenue was due to the rise in export quantity rather than the rise in prices. We also find that trade liberalization in the textile sector was associated with a fall in the export value and prices of Indian products in the US market.