ABSTRACT
Bain (1956) drew upon responses to questionnairea and follow-up interviews of managers of firms in 20 American industries, and the information obtained refers to 1951 or thereabouts. He sought opinions of managers on the efficient plant scale in their industry, which was then related to the current industry capacity. A summary of the results is given in Table 4.1, and it can be seen that for the majority of industries the efficient scale accounts for less than 2+ per cent of the total industry capacity. The ‘industries with slight economies of scale of plant are engaged in the processing of agricultural or mineral materials, whereas greater plant economies are frequently encountered in industries making mechanical devices’ (Bain, 1956, p. 73). The smallest m.e.s. (relative to industry size) occurred in fresh meat packing (in the range l/50 to l/5 of a per cent) and flour milling (l/10 to l/2 per cent) and the largest m.e.s. in tractors (10 to 15 per cent) and typewriters (10 to 30 per cent). These figures may understate the barrier to entry posed by economies of scale because they relate m.e.s. to national market size, whereas for many industries there were a number of regional markets (arising partly because of transport costs). Bain calculates that, for example, relative to the capacity supplying the smallest recognised sub-market in each industry, for six industries (out of the sample of 20) the m.e.s. was greater than 25 per cent.
