2009 | OriginalPaper | Chapter
Efficiency Models of Industry Growth
Authors : Jati Sengupta, Phillip Fanchon
Published in: Efficiency, Market Dynamics and Industry Growth
Publisher: Palgrave Macmillan UK
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Economic efficiency is the key to the growth of firms and industry evolution. It provides the major source of profit and increasing market share. Under competitive market structures, prices are more or less given, hence efficiency takes the form of reduction of unit costs. Unit cost reduction occurs in the short run through firms following optimal input and output strategies. In the long run however it depends on optimal policies for capital investment and optimal innovations and R&D strategies.