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minimum efficient scale of production


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The smallest possible size of a factory compatible with profitable production, below which economies of scale don't apply. Mes. can be defined in terms of production, or of employment. The turnover of a single product is ultimately bounded by the minimum efficient scale and consumer demand for a specific product (Frenken and Boschma (2007) J. Econ. Geog. 7). A firm may lower its mes. by buying in components, or through technological change (M. Jovanović2006).


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