Factor market structure and technology choice in the Colombian brick industry

This paper examines the relationship between factor markets and an industry structure such that capital-intensity is correlated with size, and firms of different sizes coexist in the long run. Empirical evidence shows that wages vary positively with firm size after correcting for education, experience, turnover and firm location. Secondary source evidence suggests that capital access differs across entrepreneurs, according to their positions in Colombian society. These assumptions are combined in a model which can generate the industry structure observed. The alternative hypothesis that capital access improves over a firm's lifetime, so that industry structure represents a growth path, is examined and rejected.