Income distribution in models for developing countries : Kenya and Tanzania
Abstract
In this study a Cobb-Douglas profit function
1S developed and used to measure relative economics
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.
None of the two groups of firms is absolutely
price-efficient and this leads to a major policy
implication that output may be increased by a reallocation
of resources from less to more productive
industries.