Large scale investments in technology may lead to diseconomies of scale due to excess capacity, cost overruns, and cost control problems.

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Large-scale investments in technology can lead to diseconomies of scale due to various reasons such as excess capacity, cost overruns, and cost control problems. Excess capacity can occur when a firm invests in technology that produces more than what is demanded by the market, leading to unused capacity and increased fixed costs. Cost overruns can happen when the estimated cost of the technology investment exceeds the actual cost, leading to a reduction in returns on investment. Cost control problems can arise when the cost of maintaining and operating the technology exceeds the expected costs, leading to a reduction in profitability.

Large Scale Investments in Technology May Lead to Diseconomies of Scale