8.9: Conclusion

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Efficient production is critical to the survival of firms. Firms that do not adopt the most efficient production methods are likely to be left behind by their competitors. Efficiency translates into cost considerations, and the structure of costs in turn has a major impact on market type. Some sectors of the economy have very many firms (the restaurant business or the dry-cleaning business), whereas other sectors have few (internet providers or airlines). We will see in the following chapters how market structures depend critically upon the concept of scale economies that we have developed here.