For example, say you had 5 kitchens making cookies in 5 parts of the city. But, then you bought 1 big kitchen, and moved all of your 5 kitchens to this 1 big location.

Due to mass production, we would expect the 1 big kitchen to operate more efficiently, and use fewer employees.

Is there a name for this in econ?

consolidation efficiencies? mass production?

  • 2
    $\begingroup$ A possible name would be "economies of scale", which is the tag you choose. $\endgroup$ – Giskard Nov 30 '19 at 20:21

If you are looking for term for the reason why the efficiencies occur it would be the increasing returns to scale.

  • $\begingroup$ I was hoping that there was a better word for the consolidation gains though. Economies-of-scale doesn't seem to capture it. e.g. the "1 big kitchen" may have the exact same scale (produce no more or less dishes) as the 5 smaller ones combined. And yet still be more efficient. $\endgroup$ – tdog2 Nov 30 '19 at 21:00
  • $\begingroup$ @tdog2 if that 1 big kitchen can produce only as 1 small one then there are no efficiency gains if that big kitchen can produce as much as 5 small ones then it’s increasing returns to scale as that’s the only possibility where one firm can have more efficiency than multiple firms (for example by being able to spread its fix costs over all those products that otherwise would be produced by 5 kitchens with 5 fixed costs). Also note increasing returns of scale are not about quantity produced per se it’s about the costs decreasing with increasing production $\endgroup$ – 1muflon1 Nov 30 '19 at 21:11

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