Empirical Study on Economies of Scale in China Manufacturing

The paper is based on Chinese industrial enterprises database, applying the method of translog cost function to measure the economies of scale in manufacturing during the period between 2000 to 2013. The result shows that the mean of scale economies (SCE) is between 0.993 and 0.996, which indicates slight diseconomies of scale. From the perspective of the SCE variation trend, before 2010, there was a decreasing trend year by year, and the variation remained stable after 2010. Considering manufacturing heterogeneity, the paper divides manufacturing into nine groups to measure economies of scale. The group measurement results show that mining industry and light industry have high economies of scale, but in a decreasing state, other sub-sectors show slight diseconomies of scale and in a stable state.