Bartelme, University of Michigan; Arnaud Costinot and Dave Donaldson, MIT and NBER; and Andres Rodriguez-Clare, University of California, Berkeley and NBER, "External Economies of Scale
and Industrial Policy: A View from Trade"
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 when trying to exploit external economies of scale.
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.
More importantly, clusters create external economies of scale
for firms that reduce per unit cost of each product produced by firms.
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.
Recently, a new type of economies of scale, called external economies of scale, has emerged.
In an industry with external economies of scale, expansion results in lower per unit costs for all participating firms.
Researchers have concluded that historical luck and/or deliberate government policy can help economies capitalize on the external economies of scale. Policy makers can use deliberate policy to help the country or locality develop the highly skilled labor needed for achieving competitiveness in the production and trading of knowledge intensive goods.
Chipman, in "External Economies of Scale
and Competitive Equilibrium" (1970), supported Marshall by demonstrating the existence of competitive equilibrium with externalities.
(i) The production of the first commodity in both countries generates external economies of scale, and the industrial production function is homothetic; and
The presence of external economies of scale, which imply industrial production functions exhibiting increasing returns to scale (IRS), complicates the analysis, firstly because the relationship between factor and commodity prices is no longer one-to-one and secondly because the output-factor endowment relationship, i.e.