Economies of scope

Economies of scope in the European Union Law

Concept of Economies of scope provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Economies of scope occur when firms achieve cost savings by increas-ing the variety of goods and services that they produce (joint produc-tion). Such effects arise when it is possible to share components and to use the same facilities and personnel to produce several products. For example, a bank may sell retail insurance products in its local branches in order to spread the fixed costs (like the office rent) over a larger number of products.