Multiproduct Firms Unlock Massive Cost Savings Through Economies of Scope
The article discusses how a company can save money by producing multiple products together instead of separately. It introduces two types of cost savings: strong economies of scope and incremental economies of scope. The researchers show that these savings, along with product-specific economies of scale, can help determine the overall economies of scale for a company. They also demonstrate that even if a company has cost savings from producing products together, it can still experience inefficiencies if the savings from producing one product separately are greater.