Fisheries Economics

4.2.2 Increasing Returns to Scale

When the ratio between the factors of production is kept fixed and the scale is increased, first the output increases in a greater proportion than the rate of increase in the factors of production. For example, if factors are doubled the output is more than doubled. The increasing returns to scale are caused by three reasons:

i) Technical and managerial indivisibilities,

ii) Specialisation and

iii) Dimensional efficiency.