Tayler, Paul J. (1990) Problems of scale : an O.R./systems approach. PhD thesis, University of Warwick.

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Abstract

The history of analyses of scale and the conventional reductionist
methodology are briefly recounted in the first chapter of the thesis. A
detailed examination is then made of the theory of economies of scale
and its development since the days of Adam Smith. A comprehensive survey
shows that the description provided by conventional economic theory is
quite unrealistic, and has been dictated by the demands of Neoclassical
ideas of equilibrium. It is shown that the available empirical evidence
does not easily allow conclusions to be drawn about the optimal scale of
plants or enterprises.
A simple simulation model then demonstrates that static economies of
scale alone are insufficient to determine "optimal" scale - dynamic
diseconomies depend upon environmental context and uncertainties of
forecasting future demand.
The question of technological change is closely bound up with issues of
scale. The principle of bounded rationality is applied to deduce some
conditions about the nature of technical change using Heiner's
"Reliability Condition". The existence of "technological heuristics"
(such as a bias in favour of scale-augmenting innovations) is predicted.
The argument is illustrated with the use of a computer simulation of
successive process innovations in a stylised chenical plant.
Conflicting ideas about "optimal" scale in electricity generation,
papermaking, brewing and cement manufacture are examined. These views
are found to be explicable by borrowing the theory of fourfold cultural
bias from the field of social anthropolgy.
An Evolutionary Model of Increasing Returns (EMIR) is developed as a
computer simulation. This model demonstrates that the restrictions
imposed by conventional economic theory can be overcome in a dynamic
economic model; economies of scale and technical change are married with
plural rationalities to provide a range of findings on industry
structure. Market share is found to be a more important determinant of
industrial success than economies of scale.
EMIR is used to demonstrate the phenomenon of technological "Lock-In";
important policy choices may be determined by small random events as
critical points. Market selection mechanisms cannot be relied upon to
optimise, whether in scale decisions or other important policy choices.
The thesis concludes with a discussion of the use of plural models to go
with plural rationalities in the analysis of policy issues.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HB Economic Theory T Technology > T Technology (General)
Library of Congress Subject Headings (LCSH):	Economies of scale -- Mathematical models, Scaling (Social sciences), Technological innovations -- Economic aspects -- Computer simulatio, Operations research
Official Date:	May 1990
Institution:	University of Warwick
Theses Department:	School of Industrial and Business Studies
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Tomlinson, Rolfe C. (Rolfe Cartwright)
Sponsors:	Science and Engineering Research Council (Great Britain) (SERC); Leverhulme Trust (LT)
Extent:	[10], 296, 123 leaves.
Language:	eng

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