Achieving Scale Collectively

Technology is often embodied in expensive and indivisible capital goods. As a result, the small scale of firms developing countries could hinder investment productivity. This paper argues that market interactions between can alleviate this concern. We design implement survey manufacturing Uganda, which uncovers an active rental for large machines among firms. then build equilibrium model firm behavior estimate it with our data. The shows quantitatively important mechanization productivity since mitigates imperfections other markets. estimated transaction costs are relatively small, motivates us to redefine boundaries as group workers sharing same machines. Doing so, average size data increases by 77%. conclude through achieve collectively.