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Economies of Scale and Increasing Returns: An Application to Mexican Microenterprises

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  • Natanael Ramírez Angulo

    () (Profesor-investigador, Facultad de Economía y Relaciones Internacionales, Universidad Autónoma de Baja California (uabc). Tijuana, B.C. México.)

  • Alejandro Mungaray Lagarda

    () (Profesor-investigador, Facultad de Economía y Relaciones Internacionales, Universidad Autónoma de Baja California (uabc). Tijuana, B.C. México.)

  • Martín Ramírez Urquidy

    () (Profesor-investigador, Facultad de Economía y Relaciones Internacionales, Universidad Autónoma de Baja California (uabc). Tijuana, B.C. México.)

  • Michelle Texis Flores

    () (Profesora-investigadora, Facultad de Economía y Relaciones Internacionales, Universidad Autónoma de Baja California (uabc). Tijuana, B.C. México.)

Abstract

The paper discusses the conditions for microenterprises to remain in the market. The analysis demonstrates that microenterprises facing tight constraints may remain in the market only if they are capable of achieving increasing returns and economies of scale that shift down their average cost curves towards more competitive levels. This finding is supported by the analysis of a sample of 95 Mexican microenterprises, and by the estimation of a production optimization model.

Suggested Citation

  • Natanael Ramírez Angulo & Alejandro Mungaray Lagarda & Martín Ramírez Urquidy & Michelle Texis Flores, 2010. "Economies of Scale and Increasing Returns: An Application to Mexican Microenterprises," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 213-230, July-Dece.
  • Handle: RePEc:emc:ecomex:v:19:y:2010:i:2:p:213-230
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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XIX-2/01.EM.NatanaelRamirez(213-230).pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    microenterprises; costs; increasing returns and economies of scale.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Y - Miscellaneous Categories
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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