33-47

• Evangelopoulos, Panagiotis

The Proportionality Controversy has played a remarkable role of the determination of cause of the economies of scale in the history of economic theory. On the one pole of the controversy the neoclassical position claims that full divisibility of the factors of production causes constant returns of scale and on the other pole the Chamberlin’s critique against the linear homogenous production function. Chamberlin argues that despite of both the proportionality principle and full divisibility the average cost will make the curve turn up shaping a U form. Although Leibenstein offers an alternative support of Chamberlin’s critique late in ‘50s, the neoclassical position remains unassailable as long as economies of scale can occur only if at least one of the factors is either fixed or indivisible.

• Economics and Business

• Economics

proportionality, divisibility, economies of scale

JEL classification: B13, B21