second reason why increasing returns are now trumping economies of scale is that the digital economy in and of itself creates the possibility of conquering another kind of competitive advantage under the form of network effects.

Contrary to the economies of scale feedback loop, which is more or less a logarithmic function, ICT-driven feedback loops tend to have the shape of an exponential function. In other words, the more so-called tech companies deploy those technologies on transition markets, the more their returns to scale increase instead of diminishing, providing... See more

All in all, Fordist markets were characterized by the coexistence of two positive feedback loops. One, inspired by the taste for growth, was the race to increase operational effectiveness at scale; the other, imposed by the sense of profitability, was the urge to design and implement what Michael Porter introduced as a competitive strategy.... See more

The history of business throughout the 20th century reads like the history of the conversion of many sectors to that new regime: from media to agriculture, from banking to luxury, every industry ended up complying with the paradigm of mass production (and consumption).