Editing Economies of scale (section)

===Sraffa's critique===
[[Piero Sraffa]] observes that Marshall, in order to justify the operation of the law of increasing returns without it coming into conflict with the hypothesis of free competition, tended to highlight the advantages of external economies linked to an increase in the production of an entire sector of activity.    However, "those economies which are external from the point of view of the individual firm, but internal as regards the industry in its aggregate, constitute precisely the class which is most seldom to be met with." "In any case -  Sraffa notes – in so far as external economies of the kind in question exist, they are not linked to be called forth by small increases in production," as required by the marginalist theory of price.{{sfnmp|Sraffa|1926|1p=49|2a1=Sraffa|2y=1925}} Sraffa points out that, in the equilibrium theory of the individual industries, the presence of external economies cannot play an important role because this theory is based on marginal changes in the quantities produced.

Sraffa concludes that, if the hypothesis of [[perfect competition]] is maintained, economies of scale should be excluded. He then suggests the possibility of abandoning the assumption of free competition to address the study of firms that have their own particular market.{{sfnp|Sraffa|1926|p=58}}  This stimulated a whole series of studies on the cases of [[imperfect competition]] in Cambridge. However, in the succeeding years Sraffa followed a different path of research that brought him to write and publish his main work ''Production of commodities by means of commodities'' {{harv|Sraffa|1966}}. In this book, Sraffa determines relative prices assuming no changes in output, so that no question arises as to the variation or constancy of returns.