external economies of scale

external economies of scale

the factors outside the influence of a single firm that lead to decreasing long-run AVERAGE COSTS for firms within an industry as a whole. For example, if a college concentrated on training large numbers of, say, computer programmers to serve the needs of local computer business nearby, then the individual employer would have a supply of trained programmers available, with a resulting reduction in the firm's own (internal) training costs. See EXTERNAL DISECONOMIES OF SCALE, ECONOMIES OF SCALE, INTERNAL ECONOMIES OF SCALE.
References in periodicals archive ?
This is what's meant by the term external economies of scale.
Thus, it's also incumbent on a business to follow the workings of government and plan accordingly in order to strike the right balance when trying to exploit external economies of scale.
There is also an interplay between internal and external economies of scale through the set-up or sunk costs of a business.
These are also sources of external economies of scale because business and government are able to serve each other's needs, with the latter via infrastructure provision and the former via taxes and fees.
With the arrival of Nestle, Post Cereals and ConAgra Foods, the city is on the verge of developing external economies of scale in the area of food processing.
External economies of scale relate to the size of an entire industry within a given geographic location.
National policies, then, should be directed towards enabling citizens to acquire the specialized knowledge and technological skills needed to help these countries switch to industries such as software, consumer electronics, computer hardware, information technology and others that exhibit external economies of scale.
Basically, external economies of scale result in improved welfare when trade is expanded.