Optimum Plant Size in United Kingdom Industries: Some Survivor Estimates.

This article discusses a survivor technique for estimating the optimum plant size of industries in Great Britain. In applying the technique firms in an industry are classified into size classes at two dates; and size classes with increased market shares are identified. The concept of efficiency or optimality underlying the use of the survivor technique is different from and wider than that underlying the traditional analysis in the theory of the firm. Main criticism to the interpretation of survivor estimates is that success in the market often depends on factors other than those which would normally represent genuine welfare gains. These factors include, restrictive agreements and the control of scarce resources. All estimates calculated for this paper have been based on successive reports on manufacturing industry from the British census of production from 1954-68. The analysis has been applied to plants employing more than 25 people. The high rejection rate is not a criticism of the technique itself and does not invalidate the estimates shown. However, the included industries cannot be considered representative of manufacturing industries in general. Thus only two engineering industries are included--agricultural machinery and watches and clocks.