Term:
Product specific economies of scale
Definition:
Product specific economies of scale are associated with the volume of output of any single product made and sold. In a multi-product firm or plant, product specific economies are often realized by specializing in the manufacture of one or a few products over a larger scale of output. Such economies generally arise by avoiding the costs of interrupting production and re-tooling that is required in order to produce different products with the same machinery and equipment. Product specific economies are often the basis for specialization agreements.
Domain:
Finance
Source:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.