These economies are those which are reaped by a firm not on account of its own efforts and increase in its scale, but on account of the expansion and growth of the industry to which it belongs as also on account of overall development of the economy and markets. Some of the sources of these economies are as under:
1. Economies of Information:
Availability of information is cheaper when we consider the industry as a whole. A firm requires continuous information regarding the prices of inputs and its product, as also likely changes in them on account of shifts in government policies and other developments. If the industry as a whole sets up facilities for providing information through various means of communication. It is much cheaper, then if it is done by the firm alone. As a result, when the authorizes or the industry as a whole provides means of information, it becomes economical for the firm to use the same sets up.
2. Research and development:
The results of research undertaken by the authorizes or by the industry as a whole are economical for the firm of use. Also, it is generally commercially viable for a research organization to undertake research or its own and sell the findings to individual firms on payment basis than for the firms to undertake the same individually.
3. Economics of Concentration:
When an industry is concentrated in a central locality or region, its firms get incidental saving in costs in the form of cheaper and more reliable services. These services cover, for example, repairs, consultancy, banking, credit, insurance, financial advice, packing, transport, housing, communication, training, housing, health care and so on. An individual firm is able to make use of these services at competitive and economical prices.
4. Economics of Specialization:
When a number of associated and interlinked industries get located in the neighborhood, they all provide support to each other and their cross comes down. As a result, the individual firms also benefit from the development.