Economies of scale in cement industry

Abstract

This paper investigates whether there are economies of scale in the Indian cement industry. It, therefore, estimates cost-output (sales) relationships, using the time series and the cross-section data, and at the industry level and the firm level. At the industry level, the cost-output relationships have been estimated separately for all-India. Bihar, and Madras — the regional classification for which time-series data are available. The relationships between cost components — material cost, labour cost, and depreciation cost — and output, have also been determined in order to identify the sources of economies or diseconomies of scale.