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Factor Substitution in Small and Large U.S. Manufacturing Establishments: 1977-82

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  • Nguyen, Sang V
  • Reznek, Arnold P

Abstract

The objective of this article is to assess the possibility of differences in factor substitution in the production of small and large U.S. manufacturing establishments. For empirical implementation, we specify and estimate separate three-factor translog production factors, using confidential plant-level data for five four-digit industries extracted from the U.S. Bureau of the Census Longitudinal Research Database. Our primary finding is that for most industries under study, small establishments appear to be at least as flexible as large establishments in factor substitution. This finding, together with our previous results on economies of scale (Nguyen and Reznek, 1991), suggests that for the five industries under examination, large size is not a necessary condition for efficient production. Copyright 1993 by Kluwer Academic Publishers

Suggested Citation

  • Nguyen, Sang V & Reznek, Arnold P, 1993. "Factor Substitution in Small and Large U.S. Manufacturing Establishments: 1977-82," Small Business Economics, Springer, vol. 5(1), pages 37-54, March.
    • Handle: RePEc:kap:sbusec:v:5:y:1993:i:1:p:37-54
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    Cited by:

    1. Hepburn, Cameron & Teytelboym, Alexander & Cohen, Francois, 2018. "Is Natural Capital Really Substitutable?," INET Oxford Working Papers 2018-12, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    2. Sang V Nguyen & Mary L Streitwieser, 1997. "Capital-Energy Substitution Revisted: New Evidence From Micro Data," Working Papers 97-4, Center for Economic Studies, U.S. Census Bureau.
    3. Robert H Mcguckin, 1990. "Longitudinal Economic Data At The Census Bureau: A New Database Yields Fresh Insight On Some Old Issues," Working Papers 90-1, Center for Economic Studies, U.S. Census Bureau.
    4. Chengjun Lu & Duanming Zhou, 2009. "Industrial energy substitution and a revised Allen elasticity in China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(1), pages 110-124, March.

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