... of output resulting in lower unit costs. Such inputs include capital, R&D and advertising. (b) Specialization in inputs: When the scale of the plant or the firm increases, opportunities for specialization for both the labor force and the capital equipment become available resulting in increased efficiencies. (c) Lower input costs: Input costs may be lowered due to volume discounts, lower transaction costs, reduced inventories and other similar cost efficiencies resulting from large scale of operations. (d) Advanced techniques and organizations: Expanded scale of operations may make possible more efficient methods of production and distribution (e.g. automation) and allow improved organization of resources resulting in efficiency gains. (e) Learning: Efficiencies may result from increased scale due to rapid learning. Such economies are more readily available in production and distribution processes involving high degrees of tacit knowledge. Main disadvantages of the economies of scale could be considered: (a) The disadvantages of large ...

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