What types of external economies generates the output which reduces the costs of the firms in it?
The chief example of external economies provided by marshal are (i) improved methods of machinery which are accessible to the whole industry when it expands (ii) economies which result from the growth of correlated branches f industry which mutually assist one another and being concentrated in the same localities encourage the development of hereditary skill the growth of subsidiary trades supplying it with implements and machinery (ii) economies which are connected with the growth of knowledge and the progress of arts especially in matters of trade knowledge newspapers trades trade and technical publications.
Like marshal Joan Robinson who analyzed the phenomenon of increasing returns (decreasing cost) in the context of partial equilibrium analysis provided the following main examples of eternal economies (i) the cases where the machinery can be bought more cheaply when the industry presents a large market to the machine-making industry and (ii) the case where a large labour force is accustomed to work in a certain trade and develops traditional skill.