external economies of scale

external economies of scale

the factors outside the influence of a single firm that lead to decreasing long-run AVERAGE COSTS for firms within an industry as a whole. For example, if a college concentrated on training large numbers of, say, computer programmers to serve the needs of local computer business nearby, then the individual employer would have a supply of trained programmers available, with a resulting reduction in the firm's own (internal) training costs. See EXTERNAL DISECONOMIES OF SCALE, ECONOMIES OF SCALE, INTERNAL ECONOMIES OF SCALE.