1. ECONOMIES AND
DISECONOMIES OF
SCALE IN
AQUACULTURE
NIMNAGA.K
MSC IF

2. ECONOMIES OF SCALE

3. • Economies of scale is a long run concept and
refers to reductions in unit cost as the size of
the facility and the usage levels of other
inputs increase
• Refers to the cost advantages that an
enterprise obtains due to expansion

4. Common sources are….
• Purchasing: bulk buying of materials through
long-term contracts
• Financial: obtaining lower interest charges
when borrowing from banks
• Managerial: increasing the specialization of
managers

5. Common sources are….
• Marketing: spreading the cost of advertising
over a greater range of output
• Technological: taking advantage of returns to
scale in the production function
• Learning by doing

7. Economies of scale in aquaculture business
can result from the adoption of larger pieces
of equipment or more advanced technologies

8. Economies of scale and
Returns to scale
Economies of scale Returns to scale
• Refer to a firm’s costs • Describe the
relationship between
inputs and outputs in
a long-run
production function

9. Returns to scale
• Constant
• increasing
• Decreasing

10. If the firm is a perfect
competitor in all input
markets, and thus the per-
unit prices of all its inputs
are unaffected by how much
of the inputs the firm
purchases , then…

11. • Economies of scale if and only if
it has increasing returns to scale
the • Diseconomies of scale if and
only if it has decreasing returns
firm to scale
has… • Neither economies nor
diseconomies of scale if it has a
constant returns to scale

12. DISECONOMIES OF SCALE

13. A firm that increases its scale of operation to a
point where it encounters rising long run average
costs is said to be experiencing internal
diseconomies of scale
The concept is the opposite of economies of
scale

15. Causes for diseconomies of scale
• Office politics
• Top-heavy companies
• Duplication of effort
• Communication costs