#business #economic Created at 2022-12-18 # [Anonymous feedback](https://www.admonymous.co/louis030195) # [[Epistemic status]] #shower-thought #to-digest # Related # TODO > [!TODO] TODO # Scale Economies >The quality of declining unit costs with increased business size is referred to as Scale Economies >~ [[Hamilton Helmer - 7 Powers|7 Powers]] ![[Pasted image 20221218084223.png]] > Beyond fixed costs, Scale Economies emerge from other sources as well. To name a few: > > • *Volume/area relationships.* These occur when production costs are closely tied to area, while their utility is tied to volume, resulting in lower per-volume costs with increasing scale. Bulk milk tanks and warehouses would serve as examples. > • *Distribution network density.* As the density of a distribution network increases to accommodate more customers per area, delivery costs decline as more economical route structures can be accommodated. A new entrant competitor to UPS would face this difficulty. > • *Learning economies.* If learning leads to a benefit (reduced cost or improved deliverables) and is positively correlated with production levels, then a scale advantage accrues to the leader. > • *Purchasing economies.* A larger scale buyer can often elicit better pricing for inputs. For example, this has helped Wal-Mart > ~ [[Hamilton Helmer - 7 Powers|7 Powers]] ## Data is overwhelmingly a Barrier in Scale Economies In the past companies struggles to get value out of data, now, with the exponential growth of [[Technology|technology]], [[Artificial intelligence|AI]] gets better and better at understanding the data.  So companies which stacked data that is not available in the public, like Jasper.ai (e-commerce data is rarely open source), have an advantage in being able to create AI that scale the company' value creation. Companies like Jasper.ai especially collects interactions between human and [[Artificial intelligence|AI]] which let you understand where the AI is [[Alignment|aligned]] or not with the [[Human in the loop|intent of the human]]. You can also understand how humans achieve some specific task and then replace them by AI. %%A human working in pair with a machine by Picasso%% ![[1671349979328_A_human_working_in_pair_with_a_machine_by_Picasso_.jpg]] For example when I was [[CTO]] of Inkdrop, we would let humans write product descriptions in pair with AI and use human activity as a signal to improve the AI, such as human removing false [[Information|information]] [[Hallucination|hallucinated]] by AI, or missing information, etc.