First published in 1998, this book introduces a new concept of profitability, called the 'efficiency rate of profit', which is defined as the ratio between the unit net margin and the unit capital requirement and shows how the efficiency rate of profit may be used in the assessment of mechanization and economies of scale. The book also shows how the efficiency rate of profit relates to the financial opportunity cost of investment, thus resolving the long-standing controversy over 'interest as a cost'. Using real-world plant-level data, the book explains fully the process of mechanization, how increasing returns to scale works at the plant level through power rule relating plant or equipment cost to capacity and how and why it is more cost effective to combine mechanization with expanding the scale of production in one combined 'package' of efficiency improvement.
Table of Contents
Part 1. Production. 1. The Resource Costs of Production. 2. The Efficiency Rate of Profit. 3. The Constant Annual Rental Model. 4. The Factor Input Frontier Production Function. Part 2. Mechanization. 5. Mechanization in Theory. 6. Mechanization in Practice. Part 3. Economies of Scale. 7. Economies of Scale in Theory. 8. The Power Rule. Part 4. Combined Mechanization and Economies of Scale. 9. Increasing Returns to Scale and Mechanization in Blast Furnace Plants. 10. The Economic Theory of Combined Mechanization and Increasing Returns to Scale.
Dudley Jackson, Professor of Economics, Department of Economics, University of Wollongong, Australia