Economies of Scale

It’s known as Economies of Scale. This is about decreasing per unit of cost with the growth of production or volume. For generating ideas, we make an investment in R&D, which is a fixed cost. Although there is a need for variable costs like labor, material or machine time for adding ideas to each unit of output, the R&D cost is shared. Hence there is a scale advantage that plays a vital role to succeed in Innovation. Furthermore, increasingly ideas are implemented as software. As the cost of copying software is zero, the scale advantage in software-centric innovation is extremely high. It’s so high that it often leads to fuelling the Natural tendency of monopoly.