[PEN-L:2443] Re: Economies of sc

[dxk15@xxxxxxxxxxxxxxxxxxx (dilek cetindamar karaomerlioglu)]

For the questions about economies of scale, here are
the answers :

1. the first economists mentioned of economies of scale
(perhaps he didnot call it so) is Adam Smith with its
description of pin factory example where he introduced
economies of specialization (one of the important sources of
economies of scale - the othes are economies of indivisibility, economies
of massed resources, economies of set-up, economies of vertical integration,
economies of firm).
Then C. Babage mentioned of causes and consequences of large
factories in 1832. Mill continued on the same lines with
smith. But real contribution to the conception is made by
Marshall by introducing not only internal economies but also
external economies.
Of cource we should also count J.vendor who helped to define
classic formalisation of economies of scale in equilibrium
by long-run cost curve (u-shaped curves which show the cost
output relationship).

2. One of the best studies of economies of scale on
manufacturing is C.F.Pratten's study in 1971 (Economies of
scale in manufacturing industry).
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I would like to make two further comments on this topic:

* Economies of scale has wide applications in
economic theory (trade, industrialization, concentration,
etc.).
* Economies of scale preserves its importance although a
huge literature attacks to it by arguing that high-tech
favors economies of scope not economies of scale. I believe
that both economies of scope and scale, in many cases, exist
together which means that large scale will be still the
dominant industrial structure in most of the industries in
the coming years.


Dilek Cetindamar Karaomerlioglu
The Center for Regional Economic Issues
Weatherhead School of Managament
Case Western Reserve University
311 Wickenden Hall
Cleveland, Ohio 44106

Email: dxk15@xxxxxxxxxxx