Pecuniary External Economies, Economies of Scale and Increasing Returns: A Note of Dissent

R.H. Grieve

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In a recent paper Chandra & Sandilands (2006) put forward three contentious propositions concerning the 'mechanics' of the process of economic growth: these propositions are to the effect (1) that 'pecuniary external economies' should not be considered instances of market failure; (2) that economies of scale are of little importance in accounting for increasing returns, increasing returns being, it is alleged, attributable to other factors such as external economies or 'industrial differentiation'; and (3) that increasing returns are not 'sector specific', implying that particular sectors should not therefore be singled out for special promotion. This note investigates the arguments advanced by Chandra & Sandilands in support of these propositions, and finds that no convincing case is made for any of them. In particular, we stress the invalidity of Chandra & Sandilands' contention that increasing returns are largely independent of economies of scale.
Original languageEnglish
Pages (from-to)127-140
Number of pages13
JournalReview of Political Economy
Volume22
Issue number1
DOIs
Publication statusPublished - Jan 2010

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