Determinants of Economies of Scale in Large Businesses—A Survey on UE Listed Firms

Abstract

This article aims at giving a contribution to the issue of the determinants of economies of scale in large businesses. After the economies of scale definition, the study identifies and analyzes the economies of cost that, according to most of the well-established literature, contribute jointly to originate the phenomenon at stake. Then, the study analyzes the information collected through specially created questionnaires from a sample of businesses listed on regulated European markets. The aim of the questionnaires is to verify if such companies obtain economies of scale in their productive processes and, if so, to identify which of the cost economies previously analyzed are actually achieved. Finally, the article analyzes data and information obtained through the questionnaires and draws some conclusions. Specifically, the study tries to overcome a one-way and sole interpretation of the economies of scale phenomenon in favour of distinction in economies of scale of II level (“in the strict sense”) and economies of scale of I level (“generic”).

Share and Cite:

M. Celli, "Determinants of Economies of Scale in Large Businesses—A Survey on UE Listed Firms," American Journal of Industrial and Business Management, Vol. 3 No. 3, 2013, pp. 255-261. doi: 10.4236/ajibm.2013.33031.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1] G. J. Stigler, “The Economies of Scale,” Journal of Law and Economics, Vol. 1, No. 1, 1958, pp. 54-71. doi:10.1086/466541
[2] C. F. Pratten and R. M. Dean, “The Economics of Large Scale Production in British Industry, an Introductory Study,” Cambridge University Press, London, 1965, p. 12.
[3] M. Bellandi, “Economie di Scala e Organizzazione Industriale,” Il Mulino, Bologna, 2007, p. 29.
[4] A. Zattoni, “Economia e Governo Dei Gruppi Aziendali,” Egea, Milano, 2008, p. 80.
[5] F. M. Scherer, “Economies of Scale and Industrial Concentration,” International Institute of Management, Beriln, 1975, p. 23.
[6] T. Dunne, M. Roberts and L. Samuelson, “Patterns of Firm Entry and Exit in US Manufactoring Industries,” Rand Journal of Economics, Vol. 19, No. 4, 1988, pp. 495-515. doi:10.2307/2555454
[7] G. Hamel and C. K. Prahalad, “Strategic Intent,” HBR Press Book, Boston, 2010, pp. 28-43.
[8] E. T. Penrose, “The Theory of the Growth of the Firm,” Wiley, New York, 1959, p. 43.
[9] D. Besanko, D. Dranove and M. Shanley, “Economics of Strategy,” Wiley, New York, 2009, p. 90.
[10] H. H. Liebhafsky, “The Nature of Price Theory,” Dursey Press, Cambridge, 1968, p. 241.
[11] A. D. Chandler, “Scale and Scope: The Dynamics of Industrial Capitalism,” Belknap, Cambridge, 1994, p. 411.
[12] J. Muller, “La Dimensione Dell’impresa e L’integrazione Verticale,” Economia Politica e Industriale, No. 1, 2003, pp. 9-21.
[13] C. F. Pratten, “A Survey of the Economies of Scale,” Columbia University, New York, 1988, p. 27.
[14] R. S. Edwards and H. Townsend, “Business Enterprise: Its Growth and Organization,” Macmillan, Londra, 1961, p. 183.
[15] J. Haldi and D. Whitcomb, “Economies of Scale in Industrial Plants,” Journal of Political Economy, Vol. 75, No. 4, 1967, pp. 373-385. doi:10.1086/259293
[16] L. J. Truett and D. B. Truett, “A Cost-Based Analysis of Scale Economies in the French Auto Industry,” International Review of Economics and Finance, Vol. 16, No. 3, 2007, pp. 369-382. doi:10.1016/j.iref.2005.08.001
[17] W. Lynk, “The Creation of Economic Efficiency in Hospital Mergers,” Journal of Health Economics, Vol. 14, No. 5, 1995, pp. 507-530. doi:10.1016/0167-6296(95)00019-4
[18] M. Weaver and A. Deolalikar, “Economies of Scale and Scope in Vietnamese Hospitals,” Social Science and Medicine, Vol. 59, No. 1, 2004, pp. 199-208. doi:10.1016/j.socscimed.2003.10.014
[19] J. V. Robinson, “The Economics of Imperfect Competition,” Macmillan, London, 1969, p. 346.
[20] C. F. Pratten, “Economies of Scale in Manufactoring Industries,” Cambridge University Press, Cambridge, 1971, p. 6.
[21] A. Cockerill, “Economies of Scale and the Structure of the Steel Industry,” The Business Economist, Vol. 6, No. 1, 1974, pp. 19-36.
[22] K. De Witte and C. M. Rui, “Big and Beautiful? On Non-Parametrically Measuring Scale Economies in Non-Convex Technologies,” Journal of Productivity Analysis, Vol. 35, No. 3, 2011, pp. 213-226. doi:10.1007/s11123-010-0191-1
[23] E. H. Chamberlin, “Towards a More General Theory of Value,” Oxford University Press, Oxford, 1957, p. 182.
[24] E. A. G. Robinson, “The Structure of Competitive Industry,” Cambridge University Press, Cambridge, 1997, p. 28.
[25] R. C. Marques and K. De Witte, “Is Big Better? On Scale and Scope Economies in the Portuguese Water Sector,” Economic Modelling, Vol. 28, No. 3, 2011, pp. 1009-1016. doi:10.1016/j.econmod.2010.11.014
[26] P. Crompton and J. P. Lesourd, “Economies of Scale in Global Iron-Making,” Resources Policy, Vol. 33, No. 2, 2008, pp. 74-82. doi:10.1016/j.resourpol.2007.10.005
[27] R. I. Anderson, R. Fok, T. Springer and J. Webb, “Technical Efficiency and Economies of Scale,” European Journal of Operational Research, Vol. 139, No. 3, 2002, pp. 598-612. doi:10.1016/S0377-2217(01)00183-7
[28] L. Bruni, “Economie Interne di Scala a Tecnica Immutata,” L’Industria, No. 3, 1964, pp. 116-132.
[29] F. T. Moore, “Economies of Scale, Some Statistical Evidence,” The Quarterly Journal of Economics, Vol. 73, No. 2, 1959, pp. 232-245. doi:10.2307/1883722
[30] L. Cockenboo, “Production Functions and Cost Functions,” In: E. Mansfield, Ed., Managerial Economics and Operations Research, Norton, New York, 1999, p. 110.
[31] F. Momigliano, “Le Economie di Scala,” In: P. Saraceno, Ed., Letture di Gestione Della Produzione, Franco Angeli, Milano, 2004, p. 93.
[32] M. Canesi, “Attualità Delle Economie di Scala: Una Verifica Empirica su un Comparto Della Meccanica Strumentale,” Economia e Politica Industriale, No. 2, 1991, pp. 103-133.
[33] B. Gold, “Changing Perspectives on Size, Scale and Return. An Interpretative Survey,” Journal of Economic Literature, Vol. 19, No. 1, 1981, pp. 5-33.
[34] W. Baldamus, “Mechanization, Utilization and Size of Plant,” The Economic Journal, Vol. 63, No. 249, 1953, pp. 50-69. doi:10.2307/2226750
[35] M. J. Piore and C. F. Sabel, “The Second Industrial Divide,” Basic Books, Londra, 1984, p. 95.
[36] H. Chaug-Ing and L. Hui-Chieh, “An Integrated Plant Capacity and Production Planning Model for High-Tech Manufacturing Firms with Economies of Scale,” International Journal of Production Economics, Vol. 118, No. 2, 2009, pp. 486-500.
[37] E. G. Tsionas and J. Loizides, “A Note on Joint Estimation of Scale Economies and Productivity Growth Parameters,” International Journal of Production Economics, Vol. 70, No. 1, 2001, pp. 37-43. doi:10.1016/S0925-5273(00)00041-4
[38] A. Smith, “Wealth of Nations,” Prometheus Books, New York, 1991.
[39] E. A. Young, “Increasing Returns and Economic Progress,” The Economic Journal, Vol. 38, No. 152, 1928, pp. 527-542. doi:10.2307/2224097
[40] C. F. Pratten, “The Competitiveness of Small Firms,” Cambridge University Press, London, 1991.
[41] A. Silberston, “Economies of Scale in Theory and Practice,” The Economic Journal, Vol. 82, No. 325, 1972, pp. 369-391. doi:10.2307/2229943
[42] J. Mingzhou, D. S. Wu and E. Murat, “Multiple Unit Auctions with Economies and Diseconomies of Scale,” European Journal of Operational Research, Vol. 174, No. 2, 2006, pp. 816-834.
[43] C. Guy, D. Bennison and R. Clarke, “Scale Economies and Superstore Retailing: New Evidence from UK,” Journal of Retailing and Consumer Services, Vol. 12, No. 3, 2005, pp. 73-81. doi:10.1016/j.jretconser.2004.03.002
[44] S. J. Prais, “The Evolution of Giant Firms in Britain: A Study of the Growth of Concentration in Manufactoring Industries,” University Press, Cambridge, 1976.
[45] J. P. Sallenave, “The Use and Abuse of Experience Curves,” Long Range Planning, Vol. 18, No. 1, 1985, pp. 64-72. doi:10.1016/0024-6301(85)90180-3
[46] W. Abernathy and K. Wayne, “The Limits of Experience curves,” Harvard Business Review, Vol. 52, No. 9, 1974, pp. 109-119.
[47] D. Jardot, W. Eichhammer and T. Fleiter, “Effects of Economies of Scale and Experience on the Cost of Energy Efficient Technologies,” Energy Efficiency, Vol. 3, No. 4, 2010, pp. 331-346. doi:10.1007/s12053-009-9074-6
[48] R. D. Foreman and E. Beauvais, “Scale Economies in Cellular Telephony: Size Matters,” Journal of Regulatory Economics, Vol. 16, No. 3, 1999, pp. 297-306. doi:10.1023/A:1008131223498
[49] C. L. Benkard, “Learning and Forgetting: The Dynamics of Aircraft Production,” Yale University, New Haven, 1998.
[50] M. Liebermann, “The Learning Curve and Pricing in the Chemical Processing Industries,” Rand Journal of Economics, Vol. 15, No. 2, 1984, pp. 213-228.
[51] M. D. Cohen and L. S. Sproull, “Organizational Learning,” Sage, Thousand Oaks, 1996.

Journals Menu
Follow SCIRP
Contact us
+1 323-425-8868
customer@scirp.org
WhatsApp +86 18163351462(WhatsApp)
Click here to send a message to me 1655362766
Paper Publishing WeChat

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.