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Economies of Scale and Scope

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Economies of Scale and Scope Definition

Economies of scale refers to the phenomenon where the average costs per unit of output decrease with the increase in the scale or magnitude of the output being produced by a firm. The opposite phenomenon, diseconomies of scale, occurs when the average unit costs of production increase beyond a certain level of output. Economies of scope exist when it is cheaper to produce two products together (joint production) than to produce them separately (OECD, 1993).

Economies of Scale and Scope Description

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Economies of Scale and Scope Examples

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Economies of Scale and Scope Strengths

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Economies of Scale and Scope Value Focus

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Economies of Scale and Scope Life Cycle

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Economies of Scale and Scope References

  • Ang, J. S. and Lin, J. W. (2001) A fundamental approach to estimating economies of scale and scope of financial products: The case of mutual funds, Review of Quantitative Finance and Accounting, Vol. 1 (63), pp. 205-221.
  • Bar, E. (2006) Economies of Scale Vs. Economies of Scope, Isnare Articles. Available at: http://www.isnare.com/?aid=44490&ca=Society [assessed 22 July 2008].
  • Bitros, G. (2004) Scale, Scope and Entrepreneurship. Entrepreneurship in Theory and history; Palgrave Macmillan, London.
  • Dobson, G., and Yano, C. A. (2002) Product offering, pricing, and make-to-stock/make-to-order decisions with shared capacity, Production and Operations Management, Vol. 11 (3), pp 293-312.

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