Minimum Efficient Scale

There is a limit to how much you can make something cheaper (and even then, price may not help you compete. Henry Ford and the Model T, for instance…

The car industry is subject to increasing returns and large minimum efficient scale (MES) of production.

Page 248 Kohler, Whitmarsh, Michie and Oughton in  Foxon, T, Kohler, J. and Oughton, C. (2008) Innovation For A Low Carbon Economy Economic, Institutional and Management Approaches Cheltenham: Edward Elgar


“The minimum efficient scale (MES) is the output for a business in the long run where the internal economies of scale have been fully exploited. It corresponds to the lowest point on the long run average total cost curve and is also known as the output of long run productive efficiency.”

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