Full text: Small and Big Business

vailing market conditions of the region, so that they will 
hy no means differ much; only in different countries on 
a different level of economic and technical development 
will there he very different combinations of production 
ingredients in use. To be realistic this picture has only 
to be modified in one respect: The opportunity cost of 
capital - the ruling profit rate - differs in one and the 
same country for risk capital of different sizes. Thus 
there is good reason for the simultaneous existence and appli 
cation of different methods of production, in so far as 
these different methods are used by firms of different size. 
Among the methods existing at one and the same time there 
is often one which is more efficient on all counts. That 
it does not immediately rule out all others is explained 
by its scale: Not everybody can afford to use it, since 
the risk capital of a firm limits its investment. 
If a situation continuously prevails in which there are 
unused posibilities of applying such efficient (in terms 
of labour and capital) methods, then this will explain 
why rarely anybody is tempted to use methods which will 
increase the capital-outpubratio. In other words, when 
increasing returns to capital are available in quite a 
number of fields, nobody will force capital-intensification 
in fields whert it brings diminishing returns. Another ex 
planation is that the profit margin in big business is so 
large that an increase in the capital-coefficient will

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