What is external economies of scale?

External economies of scale refer to the economic benefits that a company or industry can reap from being located in a specific geographical area. These benefits can include access to specialized resources, an increased pool of skilled labor, and increased competition. Additionally, local governments may provide incentives such as tax breaks or subsidies to draw businesses to the area. These external economies of scale can help businesses to expand and increase their profits. By taking advantage of external economies of scale, businesses can become more competitive and efficient, ultimately leading to greater success.

Written by

John Smith, Mar, 12 2023