What Are The Types Of Dis-Economies Of Scale?

Dis-economies of scale can be divided into two categories:

• Internal
• External

The principle applies to governments and companies that produce or manufacture goods/services at a higher cost-per-unit than is necessary.

There are a number of factors that can cause this phenomenon to occur.

Types of dis-economies of scale
Internal dis-economies of scale are also known as 'real dis-economies'. The following are all subdivisions of this type of phenomenon:

1. Technical problems.
2. Managerial inefficiency.
3. Commercial factors.
4. Financial factors.
5. Risk bearing.

These dis-economies arise due to internal situations. They are often referred to as 'pecuniary dis-economies'.

External dis-economies arises due to outside situations (i.e. Expansions of the industry).

The following all fall into this category:

1. More expensive raw materials and capital equipment
2. Technological issues
3. The cost of skilled labour development
4. Growth of ancillary industries
5. The need for better transportation and marketing facilities