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IP and Other Moats
Published in Gennadi Saiko, Bringing a Medical Device to the Market A Scientist's Perspective, 2022
While being big creates known inefficiencies, it can also create a sustainable competitive advantage through the economy of scale. Economies of scale refer to the case when more units of a good or service can be produced on a larger scale, which results in lower costs per unit. It also allows reducing overhead costs (e.g., administrative costs and advertising) and cost of capital. Therefore, large companies tend to dominate core market share in a particular industry. At the same time, smaller players are typically forced to either leave the industry or move into smaller “niche” segments. Unfortunately, achieving economies on the scale is hard to accomplish for early-stage startups before becoming the next Google or Facebook. More often, startups can be found on another side of the fence trying to disrupt a large player’s business with economies of scale.
Urban Simulation Model and Urban Growth, Agglomeration, Gentrification
Published in Uday Chatterjee, Arindam Biswas, Jenia Mukherjee, Dinabandhu Mahata, Sustainable Urbanism in Developing Countries, 2022
Sukanya Koner, T. Athulya Satheesh, Kalyan Nath Somavarapu, Anugya Shandilya
The two aspects of economies of scale are internal economies and external economies (Loesch 1954). Internal economies of scale or ‘traditional economies’ are subject to the internal functions of the firm reducing average unit costs to expand to larger-scale production (Hariharan and Biswas, 2020a). External economies of scale or ‘agglomeration economies’ are the economic network effects between firms and the locational benefit of being close to each other (Pfluger and Tabuchi 2018). These networks enhance the flow of information and increase competitiveness (Glaeser et al. 1992). Geographical proximity and the varying composition of economic activities play critical roles in classifying agglomeration economies into localization economies and urbanization economies (Dwivedi and Arora 2019). Localization, internal to an industry within a geographic region, indicates industry-specific input factors stimulating growth, whereas urbanization economies are internal to a spatial unit with diverse economic agents leading to urban agglomeration (Jacobs, 1969, Turok and McGranahan 2013). Mydral elaborated a phenomenon where clusters of economic activities within a region accumulate growth, known as ‘cumulative causation’ (Myrdal 1957). Accessibility of good markets, forward and backward linkages amongst firms, a concrete labor market and technological support are among the determinants of regional economic growth (Marshall 1890, Ricci 1999).
International maritime trade and international logistics
Published in Dong-Ping Song, Container Logistics and Maritime Transport, 2021
From business operations’ viewpoint, there are two common approaches used towards internationalisation and improving the efficiency and effectiveness of supply chain: centralised production and centralised inventory (Harrison and Van Hoek 2005). Centralised production aims to consolidate production into a narrow range of products and processes so that the manufacturing operations become repetitive, simpler, and more focused on relatively few key tasks. This concept is based on the fact that many manufacturers work best with a stable, large-scale production. The economies of scale in manufacturing lead to lower unit costs. The outputs of such manufacturing facilities are larger than the demand from the domestic market and are usually supplied internationally to a wide market. Centralised inventory tends to consolidate inventories into a small number of DCs (warehouses) to reduce the safety stocks by pooling the uncertain demands. This concept is based on the square root rule, which states that the safety stocks are proportional to the square root of the number of warehouses. Both approaches move the business operations towards internationalisation and push forward the international trade. However, the use of these approaches should be carefully justified by the performance of the entire international logistics system, such as cost, inventory, asset, and lead time. The point is that both approaches require efficient international logistics (transport) to support their implementation.
Dilemmas of R&D investment risks and sustainability in the clean-tech economy: Evidence from Nasdaq clean edge index components
Published in International Journal of Green Energy, 2023
Wen Sun, Xiaoling Zhang, Natasha Hazarika
R&D investment aims to seek knowledge to spur innovation and progress in pursuit of a leap in company production and profits. Consistent with resource-based view theory (Barney 1991), firms invest in R&D in order to develop innovations with sufficient inimitable, valuable, and rare characteristics for the companies to hold a competitive edge. Given that innovation is the key to success in many industries (Schoenecker and Swanson 2002), investment in R&D is necessary to equip themselves with advanced technologies to stay afloat in the market. With expansion of the business, economies of scale provide cost advantages. Hence, profits will increase while average production costs will decrease. Xu and Sim’s (2018) assessment of manufacturing industries concluded that the higher the R&D investment, the greater is the firm’s repository of technologies and products, which enhances its capacity to quickly respond to market demands, thereby positively affecting the firm’s profits. As Sougiannis (1994) has stated, investment in R&D is likely to yield five-times higher growth in market value in a given period of time. Song, Wang, and Sun (2018) have confirmed that environmental or non-environmental protection R&D could facilitate corporate profits in manufacturing. Therefore, we propose the first hypothesis for clean energy companies for comparison with previous findings. However, negative (Cazavan-Jeny and Jeanjean 2006) or combined effects (Bogliacino and Pianta 2013; Griffin and Hauser 1996; Si, Xu, and Chen 2020) and a U-shaped relationship (Lee 2018) are also found in previous studies.
Climate and the productive structure of the urban water industry
Published in Urban Water Journal, 2022
Lucas Vitor de Carvalho Sousa, Marcelo de Oliveira Torres
Where represents the variable cost elasticity with respect to water production (Yw) and the level of wastewater collected (Yef). If there are economies of scale, meaning that the firm can benefit from an increase in its quantity produced of one or both outputs, since a rise in production entails less than a proportional increase on cost. On the other hand, , the water firm is operating under diseconomies of scale, indicating that it is too large in comparison to the ideal size of the firm and it could benefit by reducing its production level. If , there are economies of scope between w and ef, that is, the joint production of water and wastewater by a firm allows it to reach a lower marginal cost of production compared to the case in which each product is produced by two independent firms. However, if on the contrary there are diseconomies of scope or in other words that a lower cost of production could be obtained by producing each of the products in different firms.
Optimisation of pavement maintenance and rehabilitation activities, timing and work zones for short survey sections and multiple distress types
Published in International Journal of Pavement Engineering, 2020
Valentin Donev, Markus Hoffmann
The estimation of agency costs for M&R treatments is based on a linear model with fixed and variable cost components. The parameter estimates for the four treatment types are provided in Figure 5 (bottom right) with graphical representation as unit costs and total project costs shown in Figure 5(a,b), respectively. The unit costs decrease with increasing project size due to the spreading of fixed costs over larger work-zone area (economies-of-scale effect). It is not possible to capture these effects with average costs used by many PMSs leading to an over- or underestimation of treatment costs for a given project.