External scale economies in manufacturing sector of Pakistan: a comparison of large scale manufacturing sector of Sindh and Punjab

Zafar, Sohail and Ahmed, Vaqar (2009): External scale economies in manufacturing sector of Pakistan: a comparison of large scale manufacturing sector of Sindh and Punjab.

Abstract

This study investigates the external economies of scale in the manufacturing sector of Pakistan. The Return to scale is a property of the production function that indicates the relationship between proportionate change, in all inputs and resulting change in output. Returns to scale are applicable only in the long run, since all inputs are being changed. The estimated value of the coefficient of returns to scale at aggregate level is 1.017. It means that one percentage point change in all input quantities results in 1.017 percent change in output. It turns out that manufacturing sector of Pakistan is characterized by almost constant returns to scale at aggregates and disaggregate level.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economies of Scale; Distortion; Efficiency; Pakistan
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R32 - Other Spatial Production and Pricing Analysis; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies

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