Learn in the textbookCompetitive Economics and Market Concepts
DefinitionEconomies of scale (規模の経済) is the effect where the cost per unit falls the more you produce or sell.
ExplanationFixed costs such as factory equipment stay the same regardless of volume, so the more units you make, the smaller each unit's share becomes. Buying raw materials in bulk to get a lower unit price is another benefit of large volume. Since volume translates directly into price competitiveness, companies that can make and sell in large quantities tend to have the edge.
AnalogyA chartered bus costs the same no matter how many people ride, so the fuller it is, the less each passenger pays.
Memory hookIn English it is economies of scale. Economy can mean saving, so read it as the savings that come from a larger scale.