The Economies of Scale.¶
Stigler, G. J. (1958). The Economies of Scale. Journal of Law and Economics, 1, 54-71.
Cited by¶
3 citations across 3 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Coarsening
- Economic structures: small firms consolidate when fixed costs of operation (compliance, legal infrastructure, managerial overhead) are high relative to variable costs, so the boundary cost dominates and large firms absorb small ones — the merger wave in fragmented industries.
This sourceClassic statement of the survivor principle and how fixed/overhead costs relative to variable costs shape the efficient firm-size distribution and drive consolidation of small firms in fragmented industries.
- Economic structures: small firms consolidate when fixed costs of operation (compliance, legal infrastructure, managerial overhead) are high relative to variable costs, so the boundary cost dominates and large firms absorb small ones — the merger wave in fragmented industries.
- Dependency Distribution Concentration
- Two further inferences concern trade-offs and dynamics. Concentration and efficiency trade: concentrated dependency is typically more cost-efficient per unit through volume discounts and learning curves, with the structural cost paid in tail exposure, so naming the trade lets a designer set the operating point intentionally.
This sourceClassic treatment of scale economies (lower unit cost at larger scale) underpinning the concentration–efficiency trade — concentrated sourcing is more cost-efficient per unit, with the structural cost paid in tail exposure.
- Two further inferences concern trade-offs and dynamics. Concentration and efficiency trade: concentrated dependency is typically more cost-efficient per unit through volume discounts and learning curves, with the structural cost paid in tail exposure, so naming the trade lets a designer set the operating point intentionally.
- Economies of Scale
- A fixed-cost component that must be incurred regardless of output volume — R&D, tooling, plant, software development, regulatory compliance, brand investment.
This sourceSeminal empirical paper introducing the 'survivor technique' — inferring minimum efficient scale from the size classes whose share of industry output grows over time — to estimate scale economies across U.S. industries.
- A fixed-cost component that must be incurred regardless of output volume — R&D, tooling, plant, software development, regulatory compliance, brand investment.
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