Economy of Scale vs. Economy of Scope

Now, I am not an economics-savvy person - I never even took Econ 101 as an undergrad (a fact I am sorely regretting, to the point of contemplating buying a textbook or auditing a class).

However, one of the points that was brought up in that Oil and Water Use class way-back-when was the idea of Economies of Scale vs. Economies of Scope. (links are to Wikipedia, which I only found mildly helpful, but a decent intro nonetheless. This article might be useful, too.)

The Scale vs. Scope thing has really been in my head lately in general; it's a big reason why I want to buy local and one of the business-related ideas that preoccupies a lot of my brain cells.

Anyway, the best way I can explain Scale vs. Scope as it matters to me is this:
An economy of scale principle means that the bigger the number of widgets your produce, the lower the cost of producing one individual widget. Because you would already have a widget factory built, you could buy more supplies at once (perhaps allowing you to negotiate the price of those supplies lower), and you could run the factory for longer each day, using a resource you already have to produce more widgets. It's kind of the idea behind buying in bulk as Sam's Club.

However, there are inherent problems when operating on the idea of more-is-cheaper. There's the obvious problem of the gallon of mayo going bad before you can use it all - the price-per-ounce actually goes up but that cost is masked by your initial thought process in the purchase. I'm reminded of the Seinfeld episode "The Rye," where Kramer goes to Costco and feeds the horse Beef-a-Reeno.

Like from the rear of that horse, there's a more insidious problem that emerges. When we try to drive down prices using the Scale concept, we often don't take into account the actual cost. The dollar amount of producing one widget may go down, but there are other tangential costs that don't appear in that lovely little price-per-widget spreadsheet. For instance, what is the impact on the environment of more widgets being produced? Are we also creating more carbon emissions along with those widgets? What is the impact as opposed to the dollar amount?

Now, an Economy of Scale isn't necessarily a bad thing, but I do see the benefits of it on paper not really reflected in real life. In trying to drive that dollar number down by making things bigger, we can end up really displacing that cost into other areas, like worker quality of life or environmental impact.

This is where my take on Economy of Scope comes in. Wikipedia's explanation of it is interesting, but I'm thinking in bigger terms, here. I'm thinking cost as opposed to price. Operating under the Scope idea, we would take into account ways to reduce the cost of things by trying to have an overall positive impact. We wouldn't displace the cost so that our dollar amount looks good on paper but someone else, somewhere else is actually paying the cost.

This is a big reason why I'm making an effort to "go green" or "reduce my carbon footprint" ... however you want to phrase it, I don't want to be pushing the cost of my life off on someone else, just so that the price of my life is low.