Scale Economies in the UK

规模经济是指规模较大的企业能够以较低的成本进行生产的程度。企业的收益可能是递增的、不变的或递减的。不断增加的回报意味着，在更大的规模上，生产成本更低。不变的回报意味着小公司和大公司的生产成本没有差别。减少的回报意味着在更大的规模上生产成本更高。规模经济是出了名的不方便——教科书模型加上规模经济在数学上是混乱的——然而亚当•斯密关于大头针厂劳动分工的著名例子（见20英镑纸币上的插图）传达了经济学中规模效应的基本性质。尽管如此，经济学家经常假设规模效应不存在，直到最近，这在经验上似乎是合理的，但最近对总市场力量研究的复苏使它们的作用重新成为焦点。在这个项目中，我们试图利用公司层面的大数据来衡量英国经济所有部门的规模经济。英国规模经济的最新研究可以追溯到二十多年前，并且集中在特定部门的少数公司，即制造业，其总体重要性已经降低。新的数据可用性使我们能够研究所有部门的规模经济，并记录其在过去20年的演变。我们对衡量规模经济感兴趣，因为它们目前影响着英国的两个重要变量：生产率和市场力量。生产率决定了一定数量的投入所能产生的产出，关键是它是生活水平的代表。市场支撑力决定了一家公司在不被竞争对手抢走生意的情况下自行定价的能力。现有研究表明，英国的生产率非常低，而新兴研究表明，市场力量正在增强。规模经济将这两个概念巧妙地联系在一起，使衡量生产率和确定市场力量的社会成本变得更具挑战性。如果规模经济确实在增长，这就可以解释市场力量的上升。此外，这与以下观察结果是一致的：英国经济结构已重新分配给那些高度投资于无形资产的部门，这些部门具有规模效应和网络效应，可能会提高规模回报。

Economies of scale represent the extent to which a larger business can produce at lower cost. A firm may have increasing, constant or decreasing returns. Increasing returns mean production is cheaper at a larger scale. Constant returns mean there is no difference in production costs for small and large firms. Decreasing returns mean production is more costly at a larger scale. Economies of scale are notoriously inconvenient - a textbook model plus scale economies is mathematically messy - yet Adam Smith's famous example of division of labour in a pin factory (see the illustration on a £20 note) conveys the fundamental nature of scale effects in economics. Despite this, economists frequently assume scale effects do not exist, which until recently seemed empirically plausible, but a recent resurgence in the study of aggregate market power brings their role back into focus.In this project we seek to measure scale economies across all sectors of the UK economy using big-data at the firm-level. Most recent studies of scale economies in the UK date back over twenty years, and were focused on a small number of firms in specific sectors, namely manufacturing which has diminished in aggregate importance. New data availability allows us to study scale economies across all sectors and document their evolution over the last 20 years.We are interested in measuring scale economies because they effect two variables of interest in the UK at the moment: productivity and market power. Productivity determines the output that can be produced from a given amount of inputs, and crucially is proxy for standards of living. Market power determines a firms ability to set its own price without threat of losing business to a competitor. Existing research shows the UK has very low productivity, whilst emerging research suggests market power is growing. Scale economies neatly link the two concepts and make measuring productivity and determining the social costs of market power considerably more challenging. If it is the case that scale economies are increasing, this could explain rising market power. Furthermore it would be consistent with the observation that the structure of the UK economy has reallocated to sectors that are highly invested in intangible assets that have scaling and network effects that may enhance returns to scale.