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> Expanding production without increasing costs is difficult What about economies of scale, though? If you can triple production while only doubling your cost,
by munchler 2y ago
> Expanding production without increasing costs is difficult
What about economies of scale, though? If you can triple production while only doubling your cost, the unit price should drop.
- cbg0 2y agoOnly if there's competition.
- logankeenan 2y agoI believe they are referring to marginal costs. Yes, with economies of scale can become cheaper to produce, but they still require capital to reach that scale. https://en.m.wikipedia.org/wiki/Marginal_cost https://en.m.wikipedia.org/wiki/Marginal_cost
- jabl 2y agoIf anything, economies of scale are a powerful argument for free trade. Say, we can have a single company in Taiwan running insanely capital intensive chip factories making chips for the entire world. One downside of this being resiliency; what happens to the global electronics supply chain if China one day decides to invade Taiwan? Something not taken into account in typical economic models. For similar reasons developed countries still try to have things like domestic agriculture, despite that being a low value add industry where poorer countries might have a large comparative advantage in a hypothetical free trade scenario.
- deleted 2y ago[deleted]
- relaxing 2y ago[flagged]
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