External Economies of Scale
This is a fall of a firm’s average costs as the industry in which they operate increases in size. The firm does not get bigger
- Skilled Labour – as an industry grows in size, firm’s training costs will fall as it becomes easier to find workers which already have the necessary skills
- Infrastructure – more likely to be built to benefit large industries
- Ancillary Services – supplies will benefit from economies of scale allowing them to cut prices for a larger industry
- Cooperation – communication between firms is easier in a ‘hub’. They are more likely to coordinate and place larger orders or work together on some projects
