Economies of Scope

Economies of Scope and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Economies of Scope: Cost savings that occur when reductions in average total costs can be achieved by increasing the number of distinct products manufactured by an enterprise. Economies of scope are possible when specialized inputs (e.g., expensive machinery or highly skilled labor) can be shared among different production processes –as, for example, when fighter aircraft and cruise missiles are produced in the same facility.