Economies of Scale: Economics for Lawyers

Abstract

The purpose of this paper is to give an insight into economies of scale – one of the basic types of efficiency gains. These economies belong to those that are the most frequently referred to and analyzed by the European Commission in its antitrust decisions, yet there are no legal nor economic articles presenting the basic economics underlying this fundamental type of efficiency gains in a way that is accessible to lawyers and the general public. The following issues are studied in this paper: the concept of economies of scale, the economic significance of economies of scale, the sources of economies of scale, the typologies thereof, and learning effects. The main contribution of this paper is to legally conceptualize economies of scale: it provides guidance on the nature and applications of economies of scale for the purpose of legal doctrine and court work on antitrust cases.