Specialisation and returns to scale

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Chapter 17 in Evolutionary Spatial Economics, 2020, pp 368-391 from Edward Elgar Publishing

Abstract: Returns to scale refer to the relation between input requirements and output response and its impact on costs. Economies of scale comprise a number of things, from simple technical scale to phenomena such as processing complex information; direction, control and improvement of independent activities; and experience. If a firm’s output increases in the same proportion as its inputs, then that firm’s technology exhibits constant returns to scale, or, one may say, a firm has constant marginal costs. If a firm’s output increases by a greater proportion than inputs, then this firm’s technology has increasing returns to scale, or it enjoys decreasing marginal costs (or increasing marginal product). If a firm’s output decreases by a smaller proportion than input requirements, then the firm suffers from decreasing returns to scale or increasing marginal costs.

Keywords: Economics and Finance; Geography (search for similar items in EconPapers)
Date: 2020
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