In industries with internal economies of scale, what is the expected trend as size increases?

In industries that experience internal economies of scale, as the size of the firm increases, there is a tendency for average costs to decrease. This phenomenon occurs because, as firms grow, they can spread fixed costs over a larger quantity of output, leading to lower average fixed costs. Additionally, larger firms can often negotiate bulk discounts on inputs, invest in more efficient production technologies, and utilize specialized labor, all of which can contribute to a reduction in average costs per unit produced.

As production scales up, the benefits of being larger become evident through increased operational efficiencies and decreased per-unit costs, making the firm more competitive in the market. This reduction in average costs continues until the firm might reach capacity constraints or experience diseconomies of scale, but generally, in the realm of internal economies of scale, the trend is one of decreasing average costs as the firm's size increases.