The measurement of relative economic efficiency in manufacturing in Kenya

Abstract

In this study a Cobb-Douglas profit function is developed and used to measure relative economic efficiency in manufacturing in Kenya. A substantive finding is that industries dominated by large firms are relatively more economic efficient than industries where small firms are the norm. This leads to the conclusion that large firms are relatively more economic efficient than their small-scale counterparts. The relative economic efficiency of large firms is not due to greater price-efficiency but to greater technical efficiency. Both large- and small-scale firms succeed to the same degree in maximizing profits