Conditions for Economies of Scope in the Presence of Fixed Costs

Ian E. Gorman

RAND Journal of Economics, 1985, vol. 16, issue 3, 431-436

Abstract: This article establishes necessary and sufficient conditions for economies of scope to exist, while taking into account the presence or absence of both local cost complementarity and product-specific fixed costs. In some circumstances the test developed here could show that economies of scope to not exist despite local cost complementarity or, alternatively, despite the existence of fixed costs. Conversely, the test could show that fixed costs are sufficient to generate economies of scope despite local cost anticomplementarity.

Date: 1985
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