Economies of Scope (Mariona) - Revision history

Fortuny Jané Mariona at 19:10, 6 October 2026

2026-10-06T19:10:15Z

← Older revision		Revision as of 21:10, 6 October 2026
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	In economics, the term "economies of scope" refers to a model/theory that defends that the ATC (Average Total Cost) of a company can decrease through broadening its production/services by diversifying its products. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one(that is usually related to the original. Through this action, the company is able to take advantage of the already cemented industry (by the first original product) and then diversify its production line with a lower cost/without this action being a cost overrun. This model says the product diversification in one same company proves to be of a cheaper cost and a lower time margin than if two different enterprises were to produce independently, precisely due to the previous cemented success of the one company in the same sector that decides to diversify.~~ ~~		In economics, the term "[https://en.wikipedia.org/wiki/Economies_of_scope economies of scope]" refers to a model/theory that defends that the ATC ([https://en.wikipedia.org/wiki/Average_cost Average Total Cost]) of a company can decrease through broadening its production/services by [https://en.wikipedia.org/wiki/Diversification_(marketing_strategy) diversifying its products]. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one (that is usually related to the original). Through this action, the company is able to take advantage of the already cemented industry (by the first original product) and then diversify its production line with a lower cost/without this action being a cost overrun. This model says the product diversification in one same company proves to be of a cheaper cost and a lower time margin than if two different enterprises were to produce independently, precisely due to the previous cemented success of the one company in the same sector that decides to diversify [1][2].

	Among the main advantages is an improvement in the company's economic and financial situation. Generating higher returns and increasing purchasing volumes with suppliers boosts financial health. Furthermore, making better use of machinery, resources, and processes helps ensure that the company's activity grows rather than declines. At the same time, this reduces the risk of bankruptcy, as new segments have been incorporated into the business.~~ ~~		Among the main advantages is an improvement in the company's economic and financial situation. Generating higher returns and increasing purchasing volumes with suppliers boosts financial health. Furthermore, making better use of machinery, resources, and processes helps ensure that the company's activity grows rather than declines. At the same time, this reduces the risk of [https://en.wikipedia.org/wiki/Bankruptcy bankruptcy], as new segments have been incorporated into the business [3].

	However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers.		However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers [3].

	~~Another~~ example is [https://en.wikipedia.org/wiki/Google Google]. Best known for running one of the world's most widely used [https://en.wikipedia.org/wiki/Search_engine search engines], Google now operates across a wide range of sectors: [https://en.wikipedia.org/wiki/Online_advertising online advertising], video ([https://en.wikipedia.org/wiki/YouTube YouTube]), mobile operating systems ([https://en.wikipedia.org/wiki/Android_(operating_system) Android]), [https://en.wikipedia.org/wiki/Cloud_computing cloud computing] ([https://en.wikipedia.org/wiki/Google_Cloud_Platform Google Cloud]), consumer devices such as [https://en.wikipedia.org/wiki/Google_Pixel Pixel] smartphones and [https://en.wikipedia.org/wiki/Pixel_Watch smartwatches], and [https://en.wikipedia.org/wiki/Artificial_intelligence artificial intelligence] research ([https://en.wikipedia.org/wiki/Google_DeepMind Google DeepMind]). What makes this an ~~[https://en.wikipedia.org/wiki/Economies_of_scope~~ economy of scope] is that these businesses share the same core resources [1][2]. Google's [https://en.wikipedia.org/wiki/Data_center data centres], custom AI chips ([https://en.wikipedia.org/wiki/Tensor_Processing_Unit TPUs]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers [3]. Similarly, the same family of AI models ([https://en.wikipedia.org/wiki/Gemini_(language_model) Gemini]) is used across all of Google's major products, from Search to [https://en.wikipedia.org/wiki/Gmail Gmail] and Android [3]. This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [https://en.wikipedia.org/wiki/Digital_platform_(infrastructure) digital platforms] [4][5]. Since 2015, Google has been part of a parent company, [https://en.wikipedia.org/wiki/Alphabet_Inc. Alphabet], which also owns more experimental ventures such as [https://en.wikipedia.org/wiki/Waymo Waymo] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources [6].		A clear example is [https://en.wikipedia.org/wiki/Google Google]. Best known for running one of the world's most widely used [https://en.wikipedia.org/wiki/Search_engine search engines], Google now operates across a wide range of sectors: [https://en.wikipedia.org/wiki/Online_advertising online advertising], video ([https://en.wikipedia.org/wiki/YouTube YouTube]), mobile operating systems ([https://en.wikipedia.org/wiki/Android_(operating_system) Android]), [https://en.wikipedia.org/wiki/Cloud_computing cloud computing] ([https://en.wikipedia.org/wiki/Google_Cloud_Platform Google Cloud]), consumer devices such as [https://en.wikipedia.org/wiki/Google_Pixel Pixel] smartphones and [https://en.wikipedia.org/wiki/Pixel_Watch smartwatches], and [https://en.wikipedia.org/wiki/Artificial_intelligence artificial intelligence] research ([https://en.wikipedia.org/wiki/Google_DeepMind Google DeepMind]). What makes this an economy of scope is that these businesses share the same core resources [1][2]. Google's [https://en.wikipedia.org/wiki/Data_center data centres], custom AI chips ([https://en.wikipedia.org/wiki/Tensor_Processing_Unit TPUs]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers [4]. Similarly, the same family of AI models ([https://en.wikipedia.org/wiki/Gemini_(language_model) Gemini]) is used across all of Google's major products, from Search to [https://en.wikipedia.org/wiki/Gmail Gmail] and Android [4]. This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [https://en.wikipedia.org/wiki/Digital_platform_(infrastructure) digital platforms] [5][6]. Since 2015, Google has been part of a parent company, [https://en.wikipedia.org/wiki/Alphabet_Inc. Alphabet], which also owns more experimental ventures such as [https://en.wikipedia.org/wiki/Waymo Waymo] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources [7].

	Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year [7].		Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year [8].

			Economies of scope demonstrate how, in a [https://en.wikipedia.org/wiki/Capitalism capitalist] market, power tends to reinforce itself. A company that has already accumulated significant resources (infrastructure, data, distribution networks, brand recognition) can use them to launch new products and then, according to this concept, achieve a much lower cost than if a new player is starting from scratch, or if independent companies were to be producing these products [1][2]. Consequently, each new product costs the established company less, generates additional revenue and data, and further strengthens its position. In other words, companies that are already powerful are best positioned to become even more powerful, which raises the [https://en.wikipedia.org/wiki/Barriers_to_entry barriers to entry] for competitors and contributes to [https://en.wikipedia.org/wiki/Market_concentration market concentration] [5][6].

			This concept acknowledges that sharing resources does not always reduce costs: when producing multiple goods jointly is more expensive than producing them separately, economists speak of diseconomies of scope [1]. However, the concept cannot explain or predict when this shift occurs. It offers a way to compare costs once they are known, but it does not clarify the extent to which a company can diversify before the costs of coordinating and managing its businesses outweigh the savings derived from shared resources. Nor does it address demand: economies of scope may reduce the cost of launching a new product, but they do not guarantee that consumers will want it. This raises a question regarding governance. If neither the company nor the regulator can determine the tipping point in advance, it is difficult to assess whether a platform's expansion will generate real [https://en.wikipedia.org/wiki/Economic_efficiency efficiencies] or simply lead to a greater concentration of [https://en.wikipedia.org/wiki/Market_power market power].

	'''References'''		'''References'''
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	[2] Teece, D. J. (1980). "Economies of scope and the scope of the enterprise". ''Journal of Economic Behavior & Organization'', 1(3), 223–247.		[2] Teece, D. J. (1980). "Economies of scope and the scope of the enterprise". ''Journal of Economic Behavior & Organization'', 1(3), 223–247.

	[3] Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm ''Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.		[3] Economia i Finances. [https://ca.economiafinanzas.com/economies-d%27abast/ "Economies d'abast"]. Retrieved 6 October 2026.

			[4] Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm ''Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.

	[4] Parker, G., Petropoulos, G. & Van Alstyne, M. (2021). [https://wordpress.bruegel.org/wp-content/uploads/2021/06/WP-2021-01-updated-150621.pdf "Platform mergers and antitrust"]. ''Industrial and Corporate Change'', 30(5). Retrieved 6 October 2026.		[5] Parker, G., Petropoulos, G. & Van Alstyne, M. (2021). [https://wordpress.bruegel.org/wp-content/uploads/2021/06/WP-2021-01-updated-150621.pdf "Platform mergers and antitrust"]. ''Industrial and Corporate Change'', 30(5). Retrieved 6 October 2026.

	[5] Crémer, J., de Montjoye, Y.-A. & Schweitzer, H. (2019). ''Competition Policy for the Digital Era''. European Commission.		[6] Crémer, J., de Montjoye, Y.-A. & Schweitzer, H. (2019). ''Competition Policy for the Digital Era''. European Commission.

	[6] Page, L. (2015). [https://abc.xyz/investor/founders-letters/2015/ "2015 Founders' Letter"]. Alphabet Investor Relations. Retrieved 6 October 2026.		[7] Page, L. (2015). [https://abc.xyz/investor/founders-letters/2015/ "2015 Founders' Letter"]. Alphabet Investor Relations. Retrieved 6 October 2026.

	[7] Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf ''2025 Annual Report'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.		[8] Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf ''2025 Annual Report'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.

Fortuny Jané Mariona at 18:52, 6 October 2026

2026-10-06T18:52:34Z

← Older revision		Revision as of 20:52, 6 October 2026
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	However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers.		However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers.

	Another example is [https://en.wikipedia.org/wiki/Google Google]. Best known for running one of the world's most widely used [https://en.wikipedia.org/wiki/Search_engine search engines], Google now operates across a wide range of sectors: [https://en.wikipedia.org/wiki/Online_advertising online advertising], video ([https://en.wikipedia.org/wiki/YouTube YouTube]), mobile operating systems ([https://en.wikipedia.org/wiki/Android_(operating_system) Android]), [https://en.wikipedia.org/wiki/Cloud_computing cloud computing] ([https://en.wikipedia.org/wiki/Google_Cloud_Platform Google Cloud]), consumer devices such as [https://en.wikipedia.org/wiki/Google_Pixel Pixel] smartphones and [https://en.wikipedia.org/wiki/Pixel_Watch smartwatches], and [https://en.wikipedia.org/wiki/Artificial_intelligence artificial intelligence] research ([https://en.wikipedia.org/wiki/Google_DeepMind Google DeepMind]). What makes this an [https://en.wikipedia.org/wiki/Economies_of_scope economy of scope] is that these businesses share the same core resources~~.<sup>~~1, 2~~</sup>~~ Google's [https://en.wikipedia.org/wiki/Data_center data centres], custom AI chips ([https://en.wikipedia.org/wiki/Tensor_Processing_Unit TPUs]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers.~~<sup>3</sup>~~ Similarly, the same family of AI models ([https://en.wikipedia.org/wiki/Gemini_(language_model) Gemini]) is used across all of Google's major products, from Search to [https://en.wikipedia.org/wiki/Gmail Gmail] and Android.~~<sup>3</sup>~~ This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [https://en.wikipedia.org/wiki/Digital_platform_(infrastructure) digital platforms]~~.<sup>~~4, 5~~</sup>~~ Since 2015, Google has been part of a parent company, [https://en.wikipedia.org/wiki/Alphabet_Inc. Alphabet], which also owns more experimental ventures such as [https://en.wikipedia.org/wiki/Waymo Waymo] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources.~~<sup>6</sup>~~		Another example is [https://en.wikipedia.org/wiki/Google Google]. Best known for running one of the world's most widely used [https://en.wikipedia.org/wiki/Search_engine search engines], Google now operates across a wide range of sectors: [https://en.wikipedia.org/wiki/Online_advertising online advertising], video ([https://en.wikipedia.org/wiki/YouTube YouTube]), mobile operating systems ([https://en.wikipedia.org/wiki/Android_(operating_system) Android]), [https://en.wikipedia.org/wiki/Cloud_computing cloud computing] ([https://en.wikipedia.org/wiki/Google_Cloud_Platform Google Cloud]), consumer devices such as [https://en.wikipedia.org/wiki/Google_Pixel Pixel] smartphones and [https://en.wikipedia.org/wiki/Pixel_Watch smartwatches], and [https://en.wikipedia.org/wiki/Artificial_intelligence artificial intelligence] research ([https://en.wikipedia.org/wiki/Google_DeepMind Google DeepMind]). What makes this an [https://en.wikipedia.org/wiki/Economies_of_scope economy of scope] is that these businesses share the same core resources [1][2]. Google's [https://en.wikipedia.org/wiki/Data_center data centres], custom AI chips ([https://en.wikipedia.org/wiki/Tensor_Processing_Unit TPUs]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers [3]. Similarly, the same family of AI models ([https://en.wikipedia.org/wiki/Gemini_(language_model) Gemini]) is used across all of Google's major products, from Search to [https://en.wikipedia.org/wiki/Gmail Gmail] and Android [3]. This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [https://en.wikipedia.org/wiki/Digital_platform_(infrastructure) digital platforms] [4][5]. Since 2015, Google has been part of a parent company, [https://en.wikipedia.org/wiki/Alphabet_Inc. Alphabet], which also owns more experimental ventures such as [https://en.wikipedia.org/wiki/Waymo Waymo] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources [6].

	Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year.~~<sup>7</sup>~~		Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year [7].

	== References ~~==<br>#~~ Panzar, J. C. & Willig, R. D. (1981). "Economies of Scope". ''American Economic Review'', 71(2), 268–272.~~<br>#~~ Teece, D. J. (1980). "Economies of scope and the scope of the enterprise". ''Journal of Economic Behavior & Organization'', 1(3), 223–247.~~<br>#~~ Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm ''Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.~~<br>#~~ Parker, G., Petropoulos, G. & Van Alstyne, M. (2021). [https://wordpress.bruegel.org/wp-content/uploads/2021/06/WP-2021-01-updated-150621.pdf "Platform mergers and antitrust"]. ''Industrial and Corporate Change'', 30(5). Retrieved 6 October 2026.~~<br>#~~ Crémer, J., de Montjoye, Y.-A. & Schweitzer, H. (2019). ''Competition Policy for the Digital Era''. European Commission.~~<br>#~~ Page, L. (2015). [https://abc.xyz/investor/founders-letters/2015/ "2015 Founders' Letter"]. Alphabet Investor Relations. Retrieved 6 October 2026.~~<br>#~~ Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf ''2025 Annual Report'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.		'''References'''

			[1] Panzar, J. C. & Willig, R. D. (1981). "Economies of Scope". ''American Economic Review'', 71(2), 268–272.

			[2] Teece, D. J. (1980). "Economies of scope and the scope of the enterprise". ''Journal of Economic Behavior & Organization'', 1(3), 223–247.

			[3] Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm ''Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.

			[4] Parker, G., Petropoulos, G. & Van Alstyne, M. (2021). [https://wordpress.bruegel.org/wp-content/uploads/2021/06/WP-2021-01-updated-150621.pdf "Platform mergers and antitrust"]. ''Industrial and Corporate Change'', 30(5). Retrieved 6 October 2026.

			[5] Crémer, J., de Montjoye, Y.-A. & Schweitzer, H. (2019). ''Competition Policy for the Digital Era''. European Commission.

			[6] Page, L. (2015). [https://abc.xyz/investor/founders-letters/2015/ "2015 Founders' Letter"]. Alphabet Investor Relations. Retrieved 6 October 2026.

			[7] Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf ''2025 Annual Report'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.

Fortuny Jané Mariona at 18:51, 6 October 2026

2026-10-06T18:51:42Z

← Older revision		Revision as of 20:51, 6 October 2026
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	However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers.		However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers.

	Another example is [[Google]]. Best known for running one of the world's most widely used [[search ~~engine~~]]s, Google now operates across a wide range of sectors: [[online advertising]], video ([[YouTube]]), mobile operating systems ([~~[Android~~ (~~operating system~~)\|Android]]), [[cloud computing]] ([~~[Google Cloud Platform\|~~Google Cloud]]), consumer devices such as [~~[Google~~ Pixel~~\|Pixel]~~] smartphones and [~~[Pixel Watch\|~~smartwatches]], and [[artificial intelligence]] research ([[Google DeepMind]]). What makes this an [~~[economies of scope\|~~economy of scope]] is that these businesses share the same core resources.<~~ref name="PanzarWillig1981"~~>~~{{cite journal \|last1=Panzar \|first1=John C. \|last2=Willig \|first2=Robert D. \|date=1981 \|title=Economies of Scope \|journal=American Economic Review \|volume=71 \|issue=~~2 \|pages=268–272}}</ref><ref name="Teece1980">{{cite journal \|last=Teece \|first=David J. \|date=1980 \|title=Economies of scope and the scope of the enterprise \|journal=Journal of Economic Behavior & Organization \|volume=1 \|issue=3 \|pages=223–247}}</~~ref~~> Google's [~~[data center\|~~data centres]], custom AI chips ([~~[Tensor Processing Unit\|~~TPUs]]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers.<~~ref name="Alphabet10K2025"~~>{{cite report \|author=Alphabet Inc. \|date=2026 \|title=Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025 \|publisher=U.S. Securities and Exchange Commission \|url=https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm \|access-date=6 October 2026}}</~~ref~~> Similarly, the same family of AI models ([~~[Gemini~~ (~~language model~~)\|Gemini]]) is used across all of Google's major products, from Search to [[Gmail]] and Android.<~~ref name="Alphabet10K2025"~~ /> This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [[Digital platform (infrastructure)\|digital platforms]].<ref name="ParkerEtAl2021">{{cite journal \|last1=Parker \|first1=Geoffrey \|last2=Petropoulos \|first2=Georgios \|last3=Van Alstyne \|first3=Marshall \|date=2021 \|title=Platform mergers and antitrust \|journal=Industrial and Corporate Change \|volume=30 \|issue=5 \|url=https://~~wordpress~~.~~bruegel~~.org/~~wp-content~~/~~uploads/2021/06/WP-2021-01-updated-150621~~.~~pdf \|access-date=6 October 2026}}~~<~~/ref~~><ref name="Cremer2019">{{cite report \|last1=Crémer \|first1=Jacques \|last2=de Montjoye \|first2=Yves-Alexandre \|last3=Schweitzer \|first3=Heike \|date=2019 \|title=Competition Policy for the Digital Era \|publisher=European Commission}}</~~ref~~> Since 2015, Google has been part of a parent company, [~~[Alphabet Inc~~.\|Alphabet]], which also owns more experimental ventures such as [[Waymo]] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources.<~~ref name="Page2015"~~>{{cite web \|last=Page \|first=Larry \|date=2015 \|title=2015 Founders' Letter \|website=Alphabet Investor Relations \|publisher=Alphabet Inc. \|url=https://abc.xyz/investor/founders-letters/2015/ \|access-date=6 ~~October 2026}}~~</~~ref~~>		Another example is [https://en.wikipedia.org/wiki/Google Google]. Best known for running one of the world's most widely used [https://en.wikipedia.org/wiki/Search_engine search engines], Google now operates across a wide range of sectors: [https://en.wikipedia.org/wiki/Online_advertising online advertising], video ([https://en.wikipedia.org/wiki/YouTube YouTube]), mobile operating systems ([https://en.wikipedia.org/wiki/Android_(operating_system) Android]), [https://en.wikipedia.org/wiki/Cloud_computing cloud computing] ([https://en.wikipedia.org/wiki/Google_Cloud_Platform Google Cloud]), consumer devices such as [https://en.wikipedia.org/wiki/Google_Pixel Pixel] smartphones and [https://en.wikipedia.org/wiki/Pixel_Watch smartwatches], and [https://en.wikipedia.org/wiki/Artificial_intelligence artificial intelligence] research ([https://en.wikipedia.org/wiki/Google_DeepMind Google DeepMind]). What makes this an [https://en.wikipedia.org/wiki/Economies_of_scope economy of scope] is that these businesses share the same core resources.<sup>1, 2</sup> Google's [https://en.wikipedia.org/wiki/Data_center data centres], custom AI chips ([https://en.wikipedia.org/wiki/Tensor_Processing_Unit TPUs]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers.<sup>3</sup> Similarly, the same family of AI models ([https://en.wikipedia.org/wiki/Gemini_(language_model) Gemini]) is used across all of Google's major products, from Search to [https://en.wikipedia.org/wiki/Gmail Gmail] and Android.<sup>3</sup> This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [https://en.wikipedia.org/wiki/Digital_platform_(infrastructure) digital platforms].<sup>4, 5</sup> Since 2015, Google has been part of a parent company, [https://en.wikipedia.org/wiki/Alphabet_Inc. Alphabet], which also owns more experimental ventures such as [https://en.wikipedia.org/wiki/Waymo Waymo] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources.<sup>6</sup>

	Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year.<~~ref name="AlphabetAR2025"~~>{{cite report \|author=Alphabet Inc. \|date=2026 \|title=2025 Annual Report \|publisher=U.S. Securities and Exchange Commission \|url=https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf \|access-date=6 October 2026}}</~~ref~~>		Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year.<sup>7</sup>

	== References ==<br>~~{{reflist}}~~		== References ==<br># Panzar, J. C. & Willig, R. D. (1981). "Economies of Scope". ''American Economic Review'', 71(2), 268–272.<br># Teece, D. J. (1980). "Economies of scope and the scope of the enterprise". ''Journal of Economic Behavior & Organization'', 1(3), 223–247.<br># Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm ''Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.<br># Parker, G., Petropoulos, G. & Van Alstyne, M. (2021). [https://wordpress.bruegel.org/wp-content/uploads/2021/06/WP-2021-01-updated-150621.pdf "Platform mergers and antitrust"]. ''Industrial and Corporate Change'', 30(5). Retrieved 6 October 2026.<br># Crémer, J., de Montjoye, Y.-A. & Schweitzer, H. (2019). ''Competition Policy for the Digital Era''. European Commission.<br># Page, L. (2015). [https://abc.xyz/investor/founders-letters/2015/ "2015 Founders' Letter"]. Alphabet Investor Relations. Retrieved 6 October 2026.<br># Alphabet Inc. (2026). [https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf ''2025 Annual Report'']. U.S. Securities and Exchange Commission. Retrieved 6 October 2026.

Fortuny Jané Mariona at 18:50, 6 October 2026

2026-10-06T18:50:47Z

← Older revision		Revision as of 20:50, 6 October 2026
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	In economics, the term "economies of scope" refers to a model/theory that defends that the ATC (Average Total Cost) of a company can decrease through broadening its production/services by diversifying its products. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one(that is usually related to the original. Through this action, the company is able to take advantage of the already cemented industry (by the first original product) and then diversify its production line with a lower cost/without this action being a cost overrun. This model says the product diversification in one same company proves to be of a cheaper cost and a lower time margin than if two different enterprises were to produce independently, precisely due to the previous cemented success of the one company in the same sector that decides to diversify.		In economics, the term "economies of scope" refers to a model/theory that defends that the ATC (Average Total Cost) of a company can decrease through broadening its production/services by diversifying its products. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one(that is usually related to the original. Through this action, the company is able to take advantage of the already cemented industry (by the first original product) and then diversify its production line with a lower cost/without this action being a cost overrun. This model says the product diversification in one same company proves to be of a cheaper cost and a lower time margin than if two different enterprises were to produce independently, precisely due to the previous cemented success of the one company in the same sector that decides to diversify.

	~~The enterprises are able to achieve this diversification~~ with ~~gain~~, ~~through a~~ company's ~~efficiency in its production~~, ~~logistics and distribution processes~~.		Among the main advantages is an improvement in the company's economic and financial situation. Generating higher returns and increasing purchasing volumes with suppliers boosts financial health. Furthermore, making better use of machinery, resources, and processes helps ensure that the company's activity grows rather than declines. At the same time, this reduces the risk of bankruptcy, as new segments have been incorporated into the business.

	~~Its advantages are~~ that ~~there is an increase~~ in ~~performance and ~~		However, the most common disadvantage is a loss of management efficiency. When expanding products and production, it is important not to forget to strengthen the part of the company responsible for business management. At the same time, the company may lose sight of the principles on which it was founded, since it should not be forgotten that quantity does not always mean quality. This potential decline in product quality could end up affecting the company's reputation, leading to a loss of customers.

	~~followed by some compa~~		Another example is [[Google]]. Best known for running one of the world's most widely used [[search engine]]s, Google now operates across a wide range of sectors: [[online advertising]], video ([[YouTube]]), mobile operating systems ([[Android (operating system)\|Android]]), [[cloud computing]] ([[Google Cloud Platform\|Google Cloud]]), consumer devices such as [[Google Pixel\|Pixel]] smartphones and [[Pixel Watch\|smartwatches]], and [[artificial intelligence]] research ([[Google DeepMind]]). What makes this an [[economies of scope\|economy of scope]] is that these businesses share the same core resources.<ref name="PanzarWillig1981">{{cite journal \|last1=Panzar \|first1=John C. \|last2=Willig \|first2=Robert D. \|date=1981 \|title=Economies of Scope \|journal=American Economic Review \|volume=71 \|issue=2 \|pages=268–272}}</ref><ref name="Teece1980">{{cite journal \|last=Teece \|first=David J. \|date=1980 \|title=Economies of scope and the scope of the enterprise \|journal=Journal of Economic Behavior & Organization \|volume=1 \|issue=3 \|pages=223–247}}</ref> Google's [[data center\|data centres]], custom AI chips ([[Tensor Processing Unit\|TPUs]]) and software infrastructure were built to power Search, but the same infrastructure now also runs YouTube and the services Google sells to its Cloud customers.<ref name="Alphabet10K2025">{{cite report \|author=Alphabet Inc. \|date=2026 \|title=Form 10-K: Annual Report for the Fiscal Year Ended December 31, 2025 \|publisher=U.S. Securities and Exchange Commission \|url=https://www.sec.gov/Archives/edgar/data/1652044/000165204426000018/goog-20251231.htm \|access-date=6 October 2026}}</ref> Similarly, the same family of AI models ([[Gemini (language model)\|Gemini]]) is used across all of Google's major products, from Search to [[Gmail]] and Android.<ref name="Alphabet10K2025" /> This allows each new service to be developed and run at a lower cost than it would be for a standalone company, a pattern that economists identify as a defining feature of large [[Digital platform (infrastructure)\|digital platforms]].<ref name="ParkerEtAl2021">{{cite journal \|last1=Parker \|first1=Geoffrey \|last2=Petropoulos \|first2=Georgios \|last3=Van Alstyne \|first3=Marshall \|date=2021 \|title=Platform mergers and antitrust \|journal=Industrial and Corporate Change \|volume=30 \|issue=5 \|url=https://wordpress.bruegel.org/wp-content/uploads/2021/06/WP-2021-01-updated-150621.pdf \|access-date=6 October 2026}}</ref><ref name="Cremer2019">{{cite report \|last1=Crémer \|first1=Jacques \|last2=de Montjoye \|first2=Yves-Alexandre \|last3=Schweitzer \|first3=Heike \|date=2019 \|title=Competition Policy for the Digital Era \|publisher=European Commission}}</ref> Since 2015, Google has been part of a parent company, [[Alphabet Inc.\|Alphabet]], which also owns more experimental ventures such as [[Waymo]] (self-driving cars). Notably, Alphabet placed these businesses outside Google precisely because they were too unrelated to benefit from the same shared resources.<ref name="Page2015">{{cite web \|last=Page \|first=Larry \|date=2015 \|title=2015 Founders' Letter \|website=Alphabet Investor Relations \|publisher=Alphabet Inc. \|url=https://abc.xyz/investor/founders-letters/2015/ \|access-date=6 October 2026}}</ref>

			Even so, Google's diversification has its limits. The large majority of Alphabet's revenue still came from advertising in 2025, and its experimental ventures, grouped under "Other Bets", recorded an operating loss of $7.5 billion that year.<ref name="AlphabetAR2025">{{cite report \|author=Alphabet Inc. \|date=2026 \|title=2025 Annual Report \|publisher=U.S. Securities and Exchange Commission \|url=https://www.sec.gov/Archives/edgar/data/0001652044/000130817926000344/goog014907-ars.pdf \|access-date=6 October 2026}}</ref>

			== References ==<br>{{reflist}}
	~~the production of more than one product by one company, in another words, diversifying its production, and through this diversification, achieve then a reduction of the company's ~~

Fortuny Jané Mariona: Created page with "In economics, the term "economies of scope" refers to a model/theory that defends that the ATC (Average Total Cost) of a company can decrease through broadening its production/services by diversifying its products. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one(that is usually related to the original. Through this action, the company is able to take adva..."

2026-10-06T18:27:30Z

Created page with "In economics, the term "economies of scope" refers to a model/theory that defends that the ATC (Average Total Cost) of a company can decrease through broadening its production/services by diversifying its products. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one(that is usually related to the original. Through this action, the company is able to take adva..."

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In economics, the term "economies of scope" refers to a model/theory that defends that the ATC (Average Total Cost) of a company can decrease through broadening its production/services by diversifying its products. This model says that a company is considered within the 'economy of scope' concept when this one expands its productions from one successful product to more than one(that is usually related to the original. Through this action, the company is able to take advantage of the already cemented industry (by the first original product) and then diversify its production line with a lower cost/without this action being a cost overrun. This model says the product diversification in one same company proves to be of a cheaper cost and a lower time margin than if two different enterprises were to produce independently, precisely due to the previous cemented success of the one company in the same sector that decides to diversify. 

The enterprises are able to achieve this diversification with gain, through a company's efficiency in its production, logistics and distribution processes.

Its advantages are that there is an increase in performance and 

followed by some compa

the production of more than one product by one company, in another words, diversifying its production, and through this diversification, achieve then a reduction of the company's 