In almost all of the stories that I have read, diseconomies of scale arise primarily because the business is inefficient – and this is where the focus is. Improving efficiency means eliminating redundant layers of middle management, laying off other employees (as tough as that decision may be...
Diseconomies of scaleare the product ofdecreasing returns to scale. In other words, they happen when a business grows to the point that its per-unit costs begin to rise, rather than continuing to decrease as with economies of scale. As their levels of production/output rise, these firms star...