An Analysis Of Factors Influencing Scale Economy Of The Manufacturing In China

Scale economy, a fundamental issue of the economics, is referred to the economic phenomenon that the output efficiency increases as the firm's scale expanding. It reveals the relationship between scale and efficiency, and embodies firms'resource accumulation effect. Studying on scale economy helps understand the economic development condition, and guide the enterprises to expand reproduction. Classical economics, neoclassical economics and new institutional economics have elaborated the forming of scale economy wonderfully. In classical economics'view, it is division of labor and specialization that induce scale economy. In neoclassical economics'opinion, the use of machine reduces the average cost, and thus brings returns to scale. New institutional economics expounded that when the increment of external transaction costs is equal to that of internal coordination costs, the firm size is the best. On the empirical aspect, most scholars just descriptively analyzed the returns to scale in some industries, but haven't studied the factors influencing scale efficiency.This paper focuses on the analysis of the factors that affect the scale efficiency. Firstly, it calculates manufacturing listed companies' scale efficiency during 2000-2006, and analyzes preliminarily on the result. Secondly, the article empirically analyzes some influencing factors on scale economy. By using panel data model, it finds scale efficiency of the previous period, average return on assets of the industry, the product uniqueness and regional administrative monopoly degree pass statistical tests. The model's result shows:1) Scale efficiency of the previous period has a significant positive effect on current scale efficiency, so the internal organization is inheritable development of practices, which has a path-dependent to scale of economy.2) Average return on assets of the industry also has a significant positive effect on scale efficiency. The more booming of the profession, and the better of the profitability, so it is much easier to reach economics of scale.3) Generally, product uniqueness is helpful in generating economies of scope, but the empirical result shows firms pursue product uniqueness has adverse effects on forming economies of scale.4) Regional administrative monopoly degree has a significant negative effect. That means fine macro-economy is quite beneficial to accumulating resources for enterprises, and helpful to generate scale of economy.