Talk:Diseconomies of scale/Archives/2012

This article is all original research

I just read this article, and it just seems like someone submitted their econ 101 paper to wikipedia. No sources, no credibility, dubious, DUBIOUS statements (office politics only takes place in large companies?!), and a definite political bent towards libertarianism. I would be in favor of either completely modifying this article or deleting it. Phoniel (talk) 03:44, 19 October 2010 (UTC)

I agree. The entire list is weird. I have grown a company and have witnessed diseconomy of scale first hand and none of those reasons sited were relevant.

The number one reason is lack of competition causes you to get lazy. If no one is undercutting your price then the only motive you have is profit, but since you are already profitable you tend to stagnate.

Number two is there is no one to copy. Normally you don't have to do all the work because you can copy what your competition is doing and improve on it. With little or no competition you have to innovate everything yourself. And that is only if you feel so compelled to innovate, as it is just as easy to keep the statue quo. —Preceding unsigned comment added by 67.249.11.41 (talk) 17:30, 8 February 2011 (UTC)

Unionization and productivity

Could you at least find a citation, however credible, that unionization actually lowers productivity on the larger scale? --Jammoe (talk) 02:42, 20 June 2008 (UTC)

Software

I think writing software has considerable diseconomies of scale. The best programmers are typically 5-10 times more productive than the average ones. So they better work for themselves than in a big company. Also putting x programmers together doesn't generate an x times greater output as developping software has a lot of overhead (everyone has to understand everything to the details.) At worst, x programmers are even less productive than 1 programmer, because one leading programmer may have to take extra time to explain things to his colleagues. See also the classic The Mythical Man Month. --Toon Macharis 16:33, 15 May 2007 (UTC)

As a programmer, I agree. I believe this is covered in some of the current points, such as the cost of communication. That is, the more people on any project, the more time must be spent coordinating their efforts. This is somewhat reduced if they can break off into somewhat autonomous groups. For example, one group could work on the user interface and another on the "engine", with minimal need for those two groups to communicate. StuRat (talk) 02:00, 26 January 2012 (UTC)

OR

I've added an OR tag. There is a significant amount of text that appears to be supposition. A clean up and/or citations would be useful. Wikiant (talk) 21:02, 24 January 2009 (UTC)

citation needed

There's excessive use of this tag, even at the end of a piece of simple maths about the cost of management.--80.254.146.52 (talk) 16:01, 22 April 2010 (UTC)

Agreed. StuRat (talk) 02:04, 26 January 2012 (UTC)

Donuts

This article seems to use donuts as an example very often. Also there should be mention of disruption after mergers as a cause of diseconomies of scale and the example of glaxo's first merger with wellcare aswell. 83.67.29.181 (talk) 17:54, 14 April 2009 (UTC)corbs

Donuts seemed to be an easy to understand example, to keep the article accessible to all. Do you have any links on that merger ? Of course, the counter-argument on mergers is that they could just opt to avoid them, if they are so bad. StuRat (talk) 02:04, 26 January 2012 (UTC)

Growth prospects

"A small company with only 1% of the market share could easily double revenues in a year. A larger company with 90% market share will find it difficult to do so well."

How is this a diseconomy of scale? I don't see how a company's growth prospects are related to returns to scale per se. 24.67.137.170 (talk) 22:06, 30 December 2009 (UTC)

It isn't. Diseconomies of scale have nothing to do with revenue. The term refers to the increase in average total *cost* as output increases. Wikiant (talk) 17:30, 31 December 2009 (UTC)

That is one specific definition, yes. However, there's also the more general "reasons why large organizations do poorly". It might make sense to split those concepts into different articles, if there was a second term for that 2nd concept. Can you think of any ? StuRat (talk) 02:13, 26 January 2012 (UTC)

isolation of decision makers

The section on isolation of decision makers probably gets at something, but doesn't do it very well. The jalapeno donut example is demand-side rather than cost-side, so makes a bad metaphor. It also needs references, or it should be removed. CRETOG8(t/c) 06:19, 29 September 2011 (UTC)

Since you think the underlying concept is sound, might I suggest you add a better example ? StuRat (talk) 02:10, 26 January 2012 (UTC)

The title

Shouldn't this page be renamed to "Diseconomies of scale"? "Economies of scale" page makes a reference to this and this page says its plural, too. And it makes more sense, because it is plural. For reals. Byelf2007 (talk) 25 January 2011

I believe the general Wikipedia policy is to make titles singular, except in cases of terms which are almost never used in the singular, or have a slightly different meaning, like data vs. datum. So, perhaps the other article should be changed to Economy of scale, according to that policy. StuRat (talk) 02:08, 26 January 2012 (UTC)

Organization of article

Some of the inefficiencies of large firms relate directly to the per unit cost of their products, while others may, and others do not. Perhaps a more general article is needed entitled "Reasons why large firms are uncompetitive". However, until we have such an article, I think it's best to include all such inefficiencies here. I've added a new super-section ("Other effects which reduce competitiveness of large firms") and placed sections there which may not relate directly to the per unit cost. Thoughts ? StuRat (talk) 08:19, 17 October 2012 (UTC)

Other uses of term

The way the term has been defined seems too specific. I know that diseconomies of scale can also be attributed to urban economics. The understanding is that as urban areas expand they provoke a range of problems including traffic congestion and air pollution etc. To me it seems too specific to be internalize its use to just a firm. Chris.suckling (talk) 10:51, 2 June 2008 (UTC)

I agree Chris, and disagree with those who think the page should go; DIS-economies of scale are hugely important and not just to firms or government departments, for example, re the size of city+suburbs where expansion consumes surrounding arable land, thus adding more transport costs to food, waste, and also increasing work travel.NickSharp (talk) 21:59, 10 December 2012 (UTC)

I believe some uses of the term in a broader sense have now been added. StuRat (talk) 02:01, 26 January 2012 (UTC)