Steam power diffusion in the British cotton and woolen industries, 1774–1800: the role of firm size

The trajectory of steam power diffusion during the last quarter of the eighteenth century, while the Boulton and Watt patent was in effect, was determined by a complex set of factors including the technical applicability of steam on various machinery or the burden steam engines imposed in the context of the asset structure of firms. This paper focuses on comparisons regarding the operating cost of steam vs water power, as well as of different steam engine models, in the two leading sectors of textiles, cotton and wool. In particular, it will be shown that differences in the size of firms in these two sectors played a key role in determining unit cost thereby explaining how cotton came to achieve the leading rank in the diffusion of the new power source. The same analysis also explains preferences in the two sectors over particular engine models.