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Internal And External Economies Of Scale When a company reduces costs and increases production, internal economies of scale have been achieved. External economies of scale occur outside of a firm, within an industry. Thus, when an industry's scope of operations expand due to for example the creation of a better transportation network, resulting in a subsequent decrease in cost for a company working within that industry, external economies of scale are said to have been achieved. With external ES, all firms within the industry will benefit. Economies Of Scale In addition to specialization and the division of labor, within any company there are various inputs that may result in the production of a good and/or service: * Lower input costs: when a company buys inputs in bulk, say for example potatoes used to make French fries at a fast food chain; it can take advantage of volume discounts. (In turn, the...

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