internal economies of scale

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.