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Topic: Economies of scale

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In the News (Fri 24 May 19)

  Returns to scale - Wikipedia, the free encyclopedia
When combined, economies of scale and diseconomies of scale lead to ideal firm size theory, which states that per-unit costs decrease until they reach a certain minimum, then increase as the firm size increases further.
Economies of scale tend to occur in industries with high capital costs in which those costs can be distributed across a large number of units of production (both in absolute terms, and, especially, relative to the size of the market).
Network externalities resemble economies of scale, but they are not considered such because they are a function of the number of users of a good or service in an industry, not of the production efficiency within a business.
en.wikipedia.org /wiki/Economies_of_scale   (619 words)

 Economies of scale   (Site not responding. Last check: 2007-10-21)
Economies of scale tend to occur in industries with high capital costs in which those costs can be distributed across a large number of units of production.
The exploitation of economies of scale helps explain why companies grow large in some industries, why marketplaces with many participants are sometimes more efficient, and how a natural monopoly can often occur.
Network externalities resemble economies of scale, but they are not considered such because they are effects of the number of users of a good or service, not of efficiency within a business.
www.sciencedaily.com /encyclopedia/economies_of_scale   (310 words)

 Economies of scale
Economies of scale occur when long-run average costs are falling as output is increasing.
Internal economies of scale occur as the output of the individual firm increases.
External economies of scale occur as the output of the industry increases.
www.cr1.dircon.co.uk /TB/3/Econsofscale.htm   (538 words)

 Bambooweb: Economies of scope
Economies of scope are conceptually similar to Economies of scale.
Whereas economies of scale apply to efficiencies associated with increasing or decreasing the scale of production, economies of scope refer to efficiencies associated with increasing or deceasing the scope of marketing and distribution.
Economies of scope are one of the main reasons for such marketing strategies as product bundling, product lining, and family branding.
www.bambooweb.com /articles/e/c/Economies_of_scope.html   (329 words)

 Regional Economist
Economies of scale implies that "bigger is cheaper." In other words, firms that produce large amounts of output have lower average costs.
Instead, economies of scale are measured over the long run by observing the evolution of the surviving firms.
Because the survivor technique is a long-run approach to measuring economies of scale, it is too early to draw definite conclusions.
www.stlouisfed.org /publications/re/1999/d/re1999d3a.html   (604 words)

 CITE - Economies of Scale parts 2-4   (Site not responding. Last check: 2007-10-21)
In the trade literature, economies of scale (ES) are typically not precisely defined, though, in most studies they indicate increasing returns from a proportional increase in all inputs or associated reductions in unit costs.
Equally interesting to note is that an increase in the scale of operations may result in both ES and DS that derive from different sources.
Depending on the level of the optimal scale at the specific location relative to the total market size, the geographic segmentation of the market and other relevant structural characteristics, trading large quantities of output from a particular location may result in DS deriving from increased coordination, monitoring, and transportation costs.
www.ssu.missouri.edu /ssu/agec/cite/scale/scale1.htm   (1652 words)

 informationsphere.com: Economies Of Scale
Scale economies can occur at the level of individual plants or farms, in which case they generally reflect elements of the production process within a plant or farm.
Scale economies at the level of a firm may also reflect elements of marketing and distribution costs.
Scale economies and diseconomies are sometimes further distinguished as technological, reflecting changes in input use as output expands, or pecuniary, reflecting changes in prices paid for inputs as output expands.
www.informationsphere.com /html/3308.htm   (113 words)

 Economies of scale
There are many sources of economies of scale, which are important depend on the industry (and company) in question.
Economies of scale are often the claimed justification for mergers and acquisitions but it is very difficult for investors to assess the potential savings and the actual savings often disappoint.
In some cases economies of scale may be offset by diseconomies of scale that exist in the same business, but generally economies of scale are more significant.
moneyterms.co.uk /economies-of-scale   (196 words)

 JTEP | ECONOMIES OF SCALE AND SCOPE   (Site not responding. Last check: 2007-10-21)
There are economies of scale for very small taxicab firms, but over 75,000 trips per year average costs increase, so the curve is U-shaped.
This paper quantifies the significant economies of scale present in a short haul truckload drayage market through the application of a minimum cost scheduling algorithm to actual shipments.
A method is presented to decide how to calculate the degree of scale economies from estimated transport cost functions which include aggregate outputs as arguments.
www.jtep.org /archive/economic_themes_pt_2-18.htm   (1286 words)

 Economies of Scale?
A good forest economy would therefore be a local economy, and the forest economy of a state or region would therefore be a decentralized economy.
This is the opposite of a colonial economy.
Furthermore, a local forest economy, living by the measure of local economic health, might be led to some surprising alterations of logging technology.
www.tipiglen.dircon.co.uk /ecoscale.html   (2087 words)

 Ross Mayfield's Weblog
Economies of speed are achieved by using an asset to produce outputs at a higher rate of throughput.
Economies of scale are achieved by using an asset to produce more of a single output.
Economies of span are achieved by efficient coordination, or sequenced use, of assets.
radio.weblogs.com /0114726/2002/10/21.html   (399 words)

 Economies of Scale and Returns to Scale
Increasing returns to scale in production means that an increase in resource usage, by say x%, results in an increase in output by more than x%.
Another way to characterize economies of scale is with a decreasing average cost curve.
Economies of scale are most likely to be found in industries with large fixed costs in production.
internationalecon.com /v1.0/ch80/80c020.html   (446 words)

 Economies of Scale   (Site not responding. Last check: 2007-10-21)
Economies of scale are said to exist when the average cost (AC) declines as output increased over a range of output.
The generally accepted explanation for this is that AC initially declines because fixed costs are being spread over increasing output and then eventually increase as variable costs increase.
Economies of scale are not limited to manufacturing; marketing, RandD, and other functions can realize economies of scale as well.
www.msb.edu /faculty/homak/HomaHelpSite/WebHelp/Economies_of_Scale.htm   (132 words)

 Economies of Scale - Activity
Scale means big, large, massive; and as such gives us a clue to the nature of this topic.
Economies of scale is not just about 'buying in bulk' it is a range of factors that can benefit large firms and allow them to have some competitive edge over their smaller rivals.
For each of the five main sources of internal economies of scale (technical, commercial, financial, managerial, risk bearing) think of an example of how these could apply to the electronics/electrical good industry and explain your reasoning.
www.bized.ac.uk /educators/16-19/economics/markets/activity/scale.htm   (723 words)

 Economies of Scale and Scope
A firm's output is said to exhibit economies of scale (over some range of output) if, as the amount (Q) of its output is increased, (long-run) average costs (= AC = total costs divided by Q) fall (e.g., AC =20 @ Q=100, but AC = 10 @ Q = 1000).
Because of economies of scale, a smaller firm has higher costs than those of larger firms, which makes it hard to compete with the larger firms in terms of price.
Connection to Economies of scale: These days, consumers are calling for one-stop shopping (e.g., they want to be able to bank, invest, and insure with the same firm).
www.sbm.temple.edu /~wholmes/Scl&Scp.htm   (1071 words)

 Gains From Trade with Economies of Scale - A Simple Explanation
The graph shows that when 50 tons of steel are produced by the economy, the unit-labor requirement is 1 hour of labor per ton of steel.
All that is necessary is for one of the two countries to produce all of the good with economies of scale and let the other country specialize in the other good.
The final conclusion of this numerical example is that when there are economies of scale in production then free trade, after an appropriate reallocation of labor, can improve national welfare for both countries relative to autarky.
internationalecon.com /v1.0/ch80/80c040.html   (990 words)

 Techdirt:VoIP's Negative Economies of Scale
The term 'economies of scale' refers to the reduction in the cost per unit as production of a unit or the provision of a service decreases.
Economies of scale (negative or positive) relate to costs not revenues.
Negative economies of scale or diseconomies of scale are both used quite often so your argument holds not much merit on that.
www.techdirt.com /articles/20051007/1552235_F.shtml   (1638 words)

 Economies of Scale - Notes
Economies of scale occur within an firm (internal) or within an industry (external).
These are economies made within a firm as a result of mass production.
Marketing economies made by spreading the high cost of advertising on television and in national newspapers, across a large level of output.
www.bized.ac.uk /learn/economics/firms/economies/notes.htm   (587 words)

 Outsourcing - Maximizing the Benefits of Economies of Scale   (Site not responding. Last check: 2007-10-21)
Economies of scale are the holy grail of outsourcing.
Even though the importance of economies of scale is the most talked about aspect of outsourcing, it can be overplayed.
Scale is one of the most important aspects of outsourcing and the easiest to understand.
www.outsourcing-journal.com /may2001-insights.html   (951 words)

 IB Note 3. Economies of Scale in the Long Run
It is important to distinguish the long run phenomenon of "economies of scale" from the short run phenomenon of the "spreading of the overhead." Scale economies are consequent upon changing the scale of productive operations, particularly, adding to or building a larger plant.
Though perhaps not clearly understood, scale economies are attributable to "technological efficiencies" resulting from increasing the plant size, and are associated with greater specialization and division of labor.
While the short-run phenomenon of overhead spreading should not be an ex ante decision criterion for the management of a company (marginal decision criteria are recommended), the long-run possibility of exploitating scale economies is one of the chief plant-location motivators of companies, especially those bent upon achieving growth through internationalization of their operations.
facweb.furman.edu /~dstanford/ibnotes/ibnote1c.htm   (743 words)

 Scale Economies   (Site not responding. Last check: 2007-10-21)
For these economists, the key concept of economic growth is "economies of scale." Suppose all inputs are increased in the same proportion.
Economies of scale or increasing returns to scale
If economies of scale exist in the economy as a whole, and if they are quite strong, they might overcome the limited quantity of land and allow continuous increases in the division of labor, the productivity of labor, and economic growth.
william-king.www.drexel.edu /top/prin/txt/gro/gro21.html   (321 words)

 Economies of Scale
As summarized in Table 2.4, for all but 5.4 percent of the products, b is less than 1, indicating economies of scale in the purchase of new equipment.
In other words, their data "support the conclusion that there are increasing returns in equipment up to and including the largest sizes built" (p.
Haldi and Whitcomb also estimate economies of scale in operating costs.
wps.aw.com /aw_carltonper_modernio_4/0,9313,1424938-content,00.html   (324 words)

 Essential Economics: Economies of Scale and Scope
And the nature of economies of scale and scope can change the structure of competition in an industry over time as well as the profitability of supplying to consumers.
External economies of scale occur when an industry's scope of operations expand due to for example the creation of a better transportation network, resulting in a subsequent decrease in cost for a company working within that industry, external economies of scale are said to have been achieved.
Economies of scope occur where it is cheaper to produce a wider range of products rather than specialize in just a handful of products.
www.tutor2u.net /economics/content/essentials/economies_scale_scope.htm   (1046 words)

 Introduction   (Site not responding. Last check: 2007-10-21)
Economies of scale have been explicitly tied to intra-industry trade (IIT), but have played a far less important role in explaining observed trade flows or foreign direct investment (FDI) in food production and distribution (Hartman et al.).
In this study we argue that analysis of economies of scale may provide significant insights not only about IIT but also about the patterns of trade and access of international markets through multinational activity.
Our argument is in line with findings that firms strategically position themselves to take advantage of economies of scale and in the process they influence industry structure and the flows of consumption and capital goods (Chandler).
www.ssu.missouri.edu /SSU/AGEC/CITE/scale/scale.htm   (312 words)

 Economies Of Scale   (Site not responding. Last check: 2007-10-21)
economies of scale organized a club for we arrived at Grande he waked...
An examination of issues like economies of scale, economies of scope, and factor returns.
key concept of economic growth is "economies of scale." Suppose all inputs...
www.fewconomy.com /economiesofscale.html   (191 words)

 Economies of Scale in Swine Manure Utilization
Scale economy was modeled for six 1,000-head finishing facilities located on 1, 2, 3 or 6 sites.
Four scenarios representing scale economies were modeled: 1) I site with six buildings, 2) 2 sites with 3 buildings each, 3) 3 sites with 2 buildings each and 4) 6 sites with I building each.
Further research needs to be done to determine if the diseconomies of scale for pit manure utilization might be overcome by production economies of scale such as decreased roads and feed storage costs.
www.p2pays.org /ref/21/20986.htm   (1759 words)

 Jonathan Schwartz's Weblog
And the good news is not only do Solaris and Java (and most of the Java Enterprise System) eat threads for lunch, but with logical partitioning, we can deploy multiple workloads on the same chip, driving massive improvements in productivity (of capital, power, real estate and system operators).
Everyone, but everyone at the show has a different agenda - from the African operator, whose service expansion is gated by building and securing electricity generators colocated with cell towers; to the developer of one of the most successful new Java services, Virtual Girlfriend.
Scale efficiencies and the resulting massive decrease in price allowed the government to bridge the power divide through rural electrification.
blogs.sun.com /roller/page/jonathan/20050312#on_the_granularity_of_computing   (9557 words)

 Economies of Scale   (Site not responding. Last check: 2007-10-21)
'Economies of Scale by Sir Peter Maxwell Davies was goal-oriented.
Closely argued and organically developed, it was based on a scale from the composer's first string quartet, and resolved - to carthartic effect - in the B major tonality it had always been striving towards.
Economy indeed - befitting the work's dedicatee, a distinguished Scottish Economist and Cambridge-based Nobel prizewinner.
www.maxopus.com /works/econ.htm   (452 words)

 Economies of Scale   (Site not responding. Last check: 2007-10-21)
Leter Brown is on our list of good guys: he is one of the two 1991 Humanists of the Year.
Brown is the president of the World Watch Institute, a think-tank of specialists on the environment and the global economy.
For the last seven years, he has been producing the annual State of the World, which is widely considered to be the final word on the earth, and which is published in more languages than Reader's Digest.
www.humanistsofutah.org /1991/art3apr91.html   (167 words)

 Tutor2u - Minimum Efficient Scale
The minimum efficient scale (MES) is the output for a business in the long run where the internal economies of scale have been fully exploited.
The extent to which economies of scale can be exploited in the long run will vary between different industries.
The internal scale economies are limited and there is room for many separate businesses to achieve the MES.
www.tutor2u.net /economics/content/topics/buseconomics/mes.htm   (317 words)

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