Profit Function of Micro and Small Enterprises in National Capital Region, India
Fourth National Conference on MSMEs - Role in Propelling Economic Development of India, December 6, 2014, Forthcoming
17 Pages Posted: 22 Sep 2014
Date Written: September 21, 2014
Abstract
This study investigates into the profit function of micro and small enterprises in Delhi National Capital Region, India. It is based on the sample data (for 8 years ending 2013) collected for 399 enterprises drawn from manufacturing and service sectors, size wise, registration status wise and size of workforce wise. Profit has been modeled by the generalized Leontief function of the workforce and the utilization of non-human resources. It finds the coefficients of substitution between the two types of resources and the returns to scale exhibited by the sample enterprises. Overall, substitutability coefficients are very small and the returns to scale are increasing. An overwhelming majority of enterprises are in the normal profit range, although some (about 15% of enterprises) earn supernormal profits.
Keywords: Generalized Leontief profit function, National Capital Region, Micro and small enterprises, factor substitution, returns to scale, Nonlinear regression analysis.
JEL Classification: C51, D21, L21, L60
Suggested Citation: Suggested Citation