These all made with a free trade position. The analysis comparisons of the relative effects of different forms of gives an indication intervention. ECONOMIES OF SCALE It is widely held that an additional benefit from the formation of customs unions is that they enable firms of member countries to further exploit their economies of scale. Scale economies exist if average costs fall in the long run, when a firm increases its output by investing in greater productive capacity, that is, by increasing its scale of operations. There may also be economies of scale external to the firms that are associated with the expansion of the industry, such as the greater ease of marketing products. has The general approach in the theory is to assume that the firm discussed the one plant and is the sole domestic producer of the product. Implicitly, economies of both plant and firm are being considered