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Production Costs, Scale Economies, and Technical Change in U.S. Textile and Apparel Industries

Anusua Datta and Susan Christoffersen

Atlantic Economic Journal, 2005, vol. 33, issue 2, 201-213

Abstract: The elimination of quotas in textiles and apparel poses new threats from import competition. To survive, the sectors need to find least-cost methods of production. The production–cost structure of the U.S. textile and apparel industries is examined using a dual cost framework. A translog cost function is used to measure substitution elasticities between inputs, scale economies, and the nature of technical change. The scope for factor substitution in textiles remains limited with all substitution elasticities being less than unity. Labor and materials are complements in apparel production, but there is evidence of substitution between capital and labor. The rate of technical change is higher in textiles than in apparel. Given the intense import competition from low wage countries, in both industries, technical progress is labor saving. Overall, economies of scale are larger in apparel; however, scale economies have continued to increase in textiles. Copyright International Atlantic Economic Society 2005

Keywords: L10; L23; L67 (search for similar items in EconPapers)
Date: 2005
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