Economies of Score

To introduce a novel generalization of economies of scope, the paper develops a theory of average cost reductions based on enabling products to have multiple features or functions. The process is labelled economies of score. Focusing production costs on the details of product features can lead to more significant average cost reductions relative to standard economies of scope and scale. The multifeatured product is a network graph represented with a binary decision diagram that describes product feature integration for each product. A feature equilibrium is defined. Evidence suggests that the approach is apt for describing smartphone-app industrial organization