Study reveals construction companies in China face diseconomies of scale and scope.
The study looked at how big construction companies in China can save money by getting bigger or by doing more things. They used real data from 25 companies from 2003 to 2007. The results showed that some companies actually lose money when they get too big or try to do too many things at once. This means that assuming all companies are always efficient can make us think they save more money than they actually do.