ABSTRACT
This chapter discusses the historical importance and significance of economies of scale relied heavily upon references to cost curves. However, cost function estimates will not be made even though they can be derived from the reduced forms of the marginal productivity and production relationship. George Stigler has suggested an alternative method to the statistical estimation of production or cost functions to identify economies of scale. Publication of his 1958 article "The Economies of Scale" engendered subsequent application of this technique to a wide range of twentieth century industries principally in connection with anti-trust issues. The survivor technique, even when its implicit assumptions are satisfied, provides only descriptive estimates of optimality. These estimates may indicate the presence of scale economies by the survival of a particular range of plant sizes, but they do not provide an estimate of the degree, extent and significance of these economies.
