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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For example, India's Second Five Year Plan (1956-61) was an attempt in planned industrialization using internal economies of scale rather than trade.
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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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