Returns to Scale in Small and Large U.S. Manufacturing Establishments

摘要

The objective of the study is to assess the possibility of differences in theproduction technologies between large and small establishments in five selected 4-digit SIC manufacturing industries. It particularly focuses on estimating returns to scale and then make interferences regarding the efficiency of small businesses relative to large businesses. The primary findings are that: there are significant differences in the production technologies between small and large establishments; and based on the scale parameter estimates, small establishments appear to be as efficient as large establishments under normal economic conditions, suggesting that large size is not a necessary condition for efficient production. However, small establishments seem to be unable to maintain constant returns to scale production during economic recession such as that in 1982.