Decreasing Returns to Scale
Definition
Doubling all inputs less than doubles output. Often emerges from coordination problems or fixed managerial talent.
Example
Scaling a small artisan workshop to 10x size rarely produces 10x the output.
Doubling all inputs less than doubles output. Often emerges from coordination problems or fixed managerial talent.
Scaling a small artisan workshop to 10x size rarely produces 10x the output.