external diseconomies of scale

the factors outside the influence of a single firm that lead to increasing long-run AVERAGE COSTS for firms within an industry as a whole. For example, if a large number of firms settle in a particular area then the additional road congestion that they cause could slow up deliveries for any particular firm, increasing its own (internal) transport costs. See EXTERNAL ECONOMIES OF SCALE, DISECONOMIES OF SCALE.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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References in periodicals archive

In fact, he found pecuniary external diseconomies of scale to be of "indisputable practical importance" (p.

Scissors or horizon: neoclassical debates about returns to scale, costs, and long-run supply, 1926-1942

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