Minimum Efficient Scale

From Wikipedia, the free encyclopedia

Minimum efficient scale (MES) is a term used in industrial organization to denote the smallest output that a plant (or firm) can produce such that its long run average costs are minimized. This concept is useful in determining the likely market structure of a market. For instance, if the minimum efficient scale is small relative to the overall size of the market (demand for the good), there will be a large number of firms. The firms in this market will be likely to behave in a perfectly competitive manner due to the large number of competitors. [1]

[2]

[edit] References

  1. ^ Carlton D. and Perloff M.: "Modern Industrial Organization" Fourth Edition, 2005
  2. ^ Insert footnote text here
 This economics or finance-related article is a stub. You can help Wikipedia by expanding it.