Factory size, economies of scale, and the great merger wave of 1898–1902

Abstract

Analysis of census data reveals that the size of the average factory in the United States grew more rapidly during the 1870s and 1880s than during any subsequent decade through the 1920s. While the average factory doubled in size between 1869 and 1889, it increased by only about a quarter between 1899 and 1929. These results support the view that the reaping of economies of scale was not an important motive for the great merger wave.

Bigger establishments in thicker markets: can we explain early productivity differentials between Canada and the United States?

“…Much of this work focuses on the productivity performance of U.S. firms and the relationship between U.S. productivity and its determinants. Researchers have linked U.S. industrial success to induced innovation (Habakkuk 1962; Cain and Paterson 1981, 1986), technological choice (James 1983; James and Skinner 1985), and the exploitation of internal and external scale economies (Chandler 1962; Sokoloff 1984; Atack 1985; Lamoreaux 1986; O’Brien 1988). The impact of scale exploitation on manufacturing performance in other nations, most notably Britain and France, has also been the subject of recent study (Elbaum and Lazonick 1986; Nye 1987; Edgerton and Horrocks 1994; Sicsic 1994; Broadberry 1999).…”

“…2 Much of this work focuses on the productivity performance of U.S. firms and the relationship between U.S. productivity and its determinants. Researchers have linked U.S. industrial success to induced innovation (Habakkuk 1962;Cain andPaterson 1981, 1986), technological choice (James 1983;James and Skinner 1985), and the exploitation of internal and external scale economies (Chandler 1962;Sokoloff 1984;Atack 1985;Lamoreaux 1986;O'Brien 1988). two countries' economic environments.…”

Are China and India backward? Evidence from the 19th century U.S. Census of Manufactures

“…was still mainly an economy of small artisanal shops and agriculture. By the close of the century, massive manufacturing firms were beginning to dominate due to increasing returns to scale in manufacturing (O'Brien, 1988). In 1850 14.5% of the population was in manufacturing and nearly 20% by 1880.…”

Chandler's Living History:The Visible Handof Vertical Integration in Nineteenth Century America Viewed Under a Twenty‐First Century Transaction Costs Economics Lens

“…Water and later steam power sources were fuelled by discovery of new coal seams and enabled utilization of massive iron ore, lumber, and related natural resources in the west, and manufacturing firms in the east. Production innovations led to other scale‐ and scope‐sensitive cost decreases (Atack, 1986; Chandler, 1990; O'Brien, 1988; Teece, 1980). The increasing sophistication of demand also prompted firms to seek higher volume and speedier production runs, and more adaptive distribution systems (Barger, 1955; Higgs, 1971).…”