Sunday, November 11, 2012

Economies of Scale

This beginning paragraph is from the November 3 edition of The Economist.
SOME things only get bigger. From boats and planes to skyscrapers and shopping malls, size records are routinely broken. Companies are operating at record scale, too. But if the trend towards growing ever larger is clear, the economics of bigness are far murkier. In some cases, like boats, greater size still promises greater efficiency, as fixed costs are spread over higher output. In others, like buildings, the gains from scale may be running out. Where do firms lie on this spectrum?

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