internal economies of scale


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internal economies of scale

the reduction in the individual firm's AVERAGE COSTS of production as OUTPUT increases. Emphasis is often placed on technical economies such as using plant at a greater capacity to reduce unit costs. A larger plant may facilitate a greater division of labour. However, economies within the marketing, managerial and financial spheres may be similarly obtained. Compare EXTERNAL ECONOMIES OF SCALE. See ECONOMIES OF SCALE, DISECONOMIES OF SCALE.
References in periodicals archive ?
For example, India's Second Five Year Plan (1956-61) was an attempt in planned industrialization using internal economies of scale rather than trade.
This would allow internal economies of scale, bulk purchasing and the Euro Atlantic Navy could afford expensive kit, Trident and aircraft carriers.
Many of Rick Justis's contacts cite the classic reasons for outsourcing: Facilities management simply isn't a college's core business--or the task is complicated, changing often, and officials can't leverage their internal economies of scale to keep up.
Internal economies of scale to the firm can lead to imperfectly competitive markets which, by definition, fail to generate economic efficiency--the market price is always above marginal cost when the firm's demand curve is down-sloping.
When they combine significant investments in technology with skills, value proposition and detailed understanding of customers, small companies can raise internal economies of scale in a targeted part of the value chain and reduce transaction costs to match bigger competitors.
While this may be interpreted as evidence of information's external effects, it probably captures both the external and internal effects, since total home sales are likely to affect an individual lender's ability to exploit internal economies of scale, as well as the amount of information available to all lenders in the neighborhood.