<blockquote>
<p>What are the best criticisms of economies of scale?</p>
</blockquote>
<p>As mentioned by Michael in the comments economies of scale is a property of a production function, its not an philosophical idea, policy proposal or some faith based claim.</p>
<p>Hence, there is nothing to criticize here. It's a physical property like let's say color of a eyes person has. Person can have blue color eyes or not, its a matter of observing whether the eyes are blue or not. If they are there isn't any criticism you can make outside some metaphysical philosophizing about whether objective reality exists.</p>
<p>Similarly, every firm can have a technology that exhibits either decreasing, increasing or constant economies of scale. If a company has a production technology that allows it to produce more efficiently when it produces more it has increasing economies of scale (or sometimes just abbreviated economies of scale).</p>
<p>It is worth nothing that depending on particular technology firm has access to there might be economies of scale over some portion of a production (e.g. maybe between 0-1000 units), and after that there might be diseconomies of scale, or constant economies of scale.  Point is this is not necessarily global property of production process and it may apply only to some level of production.</p>
<blockquote>
<p>what determines if it [economies of scale] can be satisfied?</p>
</blockquote>
<p>Economies of scale occur when the total cost (TC) of production of some given quantity (Q) by single firm is lower than when two independent firms try to produce the same quantity <span class="math-container">$Q$</span> separately (i.e. <span class="math-container">$Q=Q_1+ Q_2$</span>). Hence, formally they occur when <span class="math-container">$TC(Q_{1}+Q_{2})&lt;TC(Q_{1})+TC(Q_{2})$</span>.</p>
<p>Practically one can check whether there are increasing returns to scale by estimating the cost function associated with producing the good Q, and then checking the slope of total cost function. If its declining over some range of quantities then at that particular quantity there are economies of scale, if its constant then there are constant economies of scale, if its increasing then there are diseconomies of scale.</p>

CC BY-SA 4.0
2024-04-15T23:14:11.110Z
2024-04-15T23:14:11.110Z
1muflon1
<p>What are the best criticisms of <a href="https://en.wiktionary.org/wiki/economies_of_scale" rel="nofollow noreferrer">economies of scale</a>—the notion that bigger, centralized industries are actually more efficient than smaller, decentralized ones?</p>
<p>Which economists historically opposed the notion of economies of scale or argued that overall they are less efficient means of manufacturing and distributing scarce goods?</p>

CC BY-SA 4.0
2024-04-15T21:26:04.717Z
It is a property that a production technology can satisfy or not. It is not "the notion that bigger, centralized industries are actually more efficient than smaller, decentralized ones." The premise of the question is wrong.
Michael Greinecker
CC BY-SA 4.0
2024-04-15T21:56:10.273Z
@MichaelGreinecker , then what determines if it can be satisfied?
Geremia
<reference-request><central-banking><history-economic-thought><philosophy-of-economics><economies-of-scale>
What are the best criticisms of economies of scale?
Geremia
# What are the best criticisms of economies of scale?

(Asked by: username_0 on 2024-04-15)

What are the best criticisms of [economies of scale](https://en.wiktionary.org/wiki/economies_of_scale)—the notion that bigger, centralized industries are actually more efficient than smaller, decentralized ones?

Which economists historically opposed the notion of economies of scale or argued that overall they are less efficient means of manufacturing and distributing scarce goods?

**Tags:** reference-request, central-banking, history-economic-thought, philosophy-of-economics, economies-of-scale

> **Comments:**
> **username_1**: It is a property that a production technology can satisfy or not. It is not "the notion that bigger, centralized industries are actually more efficient than smaller, decentralized ones." The premise of the question is wrong.  
> **username_0**: @MichaelGreinecker , then what determines if it can be satisfied?  

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## 1 answers

### Answer by username_2 on 2024-04-15. Score: 1

> What are the best criticisms of economies of scale?

As mentioned by Michael in the comments economies of scale is a property of a production function, its not an philosophical idea, policy proposal or some faith based claim.

Hence, there is nothing to criticize here. It's a physical property like let's say color of a eyes person has. Person can have blue color eyes or not, its a matter of observing whether the eyes are blue or not. If they are there isn't any criticism you can make outside some metaphysical philosophizing about whether objective reality exists.

Similarly, every firm can have a technology that exhibits either decreasing, increasing or constant economies of scale. If a company has a production technology that allows it to produce more efficiently when it produces more it has increasing economies of scale (or sometimes just abbreviated economies of scale).

It is worth nothing that depending on particular technology firm has access to there might be economies of scale over some portion of a production (e.g. maybe between 0-1000 units), and after that there might be diseconomies of scale, or constant economies of scale. Point is this is not necessarily global property of production process and it may apply only to some level of production.

> what determines if it [economies of scale] can be satisfied?

Economies of scale occur when the total cost (TC) of production of some given quantity (Q) by single firm is lower than when two independent firms try to produce the same quantity $Q$ separately (i.e. $Q=Q\_1+ Q\_2$). Hence, formally they occur when $TC(Q\_{1}+Q\_{2}).

Practically one can check whether there are increasing returns to scale by estimating the cost function associated with producing the good Q, and then checking the slope of total cost function. If its declining over some range of quantities then at that particular quantity there are economies of scale, if its constant then there are constant economies of scale, if its increasing then there are diseconomies of scale.


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