Economies of Score

Posted: 18 Apr 2017 Last revised: 18 Dec 2017

See all articles by Kweku A. Opoku-Agyemang

Kweku A. Opoku-Agyemang

University of California, Berkeley - Center for Effective Global Action (CEGA); Center for Effective Global Action, University of California, Berkeley; University of California, Berkeley - Department of Electrical Engineering & Computer Sciences (EECS)

Date Written: April 17, 2017

Abstract

To introduce a novel generalization of economies of scope, the paper develops a theory of average cost reductions based on enabling products to have multiple features or functions. The process is labelled economies of score. Focusing production costs on the details of product features can lead to more significant average cost reductions relative to standard economies of scope and scale. The multifeatured product is a network graph represented with a binary decision diagram that describes product feature integration for each product. A feature equilibrium is defined. Evidence suggests that the approach is apt for describing smartphone-app industrial organization.

Keywords: economies of scope, economies of scale, product functionality, multi-functional products, multi-feature production.

JEL Classification: L10, L17, L21, L22

Suggested Citation

Opoku-Agyemang, Kweku A. and Opoku-Agyemang, Kweku A., Economies of Score (April 17, 2017). Available at SSRN: https://ssrn.com/abstract=2954174 or http://dx.doi.org/10.2139/ssrn.2954174

Kweku A. Opoku-Agyemang (Contact Author)

University of California, Berkeley - Center for Effective Global Action (CEGA) ( email )

207 Giannini Hall
Berkeley, CA 94720-3310
United States

Center for Effective Global Action, University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

HOME PAGE: http://www.kwekuopokuagyemang.com

University of California, Berkeley - Department of Electrical Engineering & Computer Sciences (EECS)

Berkeley, CA 94720-1712
United States

HOME PAGE: http://www.kwekuopokuagyemang.com

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