external economies of scale

External economies of scale are the type that arise for groups of firms or a whole industry rather than an individual firm.

They are caused by firms being located or organised closely together, thus reducing the cost of production for all the firms invloved.

Examples include:

Firms sharing transport links such as a railway link or harbour;
Research and development by an industry that is shared between all firms in that industry;
Training facilities and courses that are provided by the whole industry;
Suppliers being located close to a group of firms that provide similar products.

Transaction cost	Free bar	economies of scale	Firms
Puzzle Pirates	Tertiary	Reducing	Agronomics
Leverage	Belize	industry	genre
cost	Product	transfinite economy	group
business