Economies of Scale Unlock Unprecedented Productivity Gains for Businesses
The article discusses how the size of production affects efficiency. When output grows faster than inputs, it shows increasing returns to scale. This can be due to various factors like fixed costs, lower costs as production increases, and benefits from overall activity. These factors impact economic models related to growth, trade, and business cycles. Estimating returns to scale is challenging due to different factors like how data is grouped and the time frame studied.