This paper has, as its opening premise, the proposition that any efficiency–comparative exercise relating to techniques coexisting in Bangladesh with varying mechanisation must explicitly seek to isolate technical efficiency from the price and allocation effects of social discrimination that handicap the cottage and small-scale producers. It then closely examines the nature of entrepreneurial acquisition of scarce resources so as to have a basis for isolating the market-structural versus the technical influences on observed relative efficiency. The study finds that the sample mills, who only have a modest edge over the smaller enterprises in cloth-output per loom in operation, have, due to their elaborate fixed assets, much higher comparative capital–net output ratio. The handloom units outclass the mills in the productivity of recurrent imported input, as also record much higher rates of surplus on the capital employed. The handloom method was found to remain markedly superior to the mill-method even after the effects of important imperfections of factor and product markets were accounted for.