Economies of Scale and Increasing Returns: An Application to Mexican Microenterprises
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.
Volume (Year): XIX (2010)
Issue (Month): 2 (July-December)
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