Economies of scope are "efficiencies formed by variety, not volume" (the latter concept is "economies of scale").[1] In economics, "economies" is synonymous with cost savings and "scope" is synonymous with broadening production/services through diversified products. Economies of scope is an economic theory stating that average total cost of production decrease as a result of increasing the number of different goods produced.[2] For example, a gas station that sells gasoline can sell soda, milk, baked goods, etc. through their customer service representatives and thus gasoline companies achieve economies of scope.[2] The business historian Alfred Chandler argued that economies of scope contributed to the rise of American business corporations during the 20th century.[3]
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