Profit Function of Micro and Small Enterprises in National Capital Region, India

This study investigates into the profit function of micro and small enterprises in Delhi National Capital Region, India. It is based on the sample data (for 8 years ending 2013) collected for 399 enterprises drawn from manufacturing and service sectors, size wise, registration status wise and size of workforce wise. Profit has been modeled by the generalized Leontief function of the workforce and the utilization of non-human resources. It finds the coefficients of substitution between the two types of resources and the returns to scale exhibited by the sample enterprises. Overall, substitutability coefficients are very small and the returns to scale are increasing. An overwhelming majority of enterprises are in the normal profit range, although some (about 15% of enterprises) earn supernormal profits