Definition: Returns to scale

Category: OECD terminology

The rate by which output changes if all inputs are changed by the same factor. Constant returns to scale: a k-fold change in all inputs leads to a k-fold change in output. Under increasing returns to scale, the change in output is more than k-fold, under decreasing returns to scale; it is less than k-fold. http://ec.europa.eu/eurostat/ramon/statmanuals/files/oecd_measuring_productivity_2001_en.pdf