What are the sources of diseconomies of scale?

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2026-03-31 21:05

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Diseconomies of Scale The services world is one built upon economies of scale. For example, networking costs for small and medium sized services can run nearly an order of magnitude more than large bandwidth consumers such as google, Amazon, Microsoft and Yahoo pay. These economies of scale make it possible for services such as Amazon S3 to pass on some of the economies of scale they get on networking, for example, to those writing against their service platform while at the same profiting (S3 is currently pricing storage under their cost but that's a business decision rather than a business model problem). These economies of scale enjoyed by large service providers extend beyond networking to server purchases, power costs, networking equipment, etc. * http://perspectives.mvdirona.com/2008/04/06/DiseconomiesOfScale.aspx

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