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.
Definition would depend on definition of "scope"; often used in the context of product mix or the extent of vertical integration. Unit costs decrease as variety and flexibility in production increase. (Quinn, Intelligent Enterprise, p.25)
when producing two products together is cheaper than producing them separately.
Economies resulting from the scope rather than the scale of the enterprise. They exist where it is less costly to combine two or more product lines in one firm than to produce them separately.
Decreases in average total cost per unit of production made possible by increasing the range of goods produced.
Economies of scope are said to exist if it is less costly for one firm to produce two separate products than for two specialized firms to produce them separately.
These are present where the unit cost of a service is lower because the firm also provides other services, ie the provision of service B reduces the unit cost of supplying service A.
what exists when it is less expensive to produce two products together than it would be to produce each one separately
Scope economies exist whenever the same investment can support multiple profitable activities less expensively in combination than separately.
decreases in average total cost made possible by increasing the number of total products produced
Decreases in average total cost that occur when a firm uses specialized resources to produce a range of goods and services.
Cost savings that result from separate products or services sharing the same resources or facilities.
Economies of scope are conceptually similar to economies of scale. Whereas economies of scale primarily refer to efficiencies associated with supply-side changes, such as increasing or decreasing the scale of production, of a single product type, economies of scope refer to efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products. Economies of scope are one of the main reasons for such marketing strategies as product bundling, product lining, and family branding.
