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.
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Hotels should be looking for a more value-added strategy proposition -- internal economies of scale or tactical pricing for third-party partners such as OTAs, for example.
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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.
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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.
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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.
Information dynamics and CRA strategy

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