Not many folks would argue that economies of scale are inefficient. The core purpose of economies of scale is to drive efficiency and lower cost, increasing value. But there is a point where the efficiency tramples effectiveness. I was reading a post this morning about the challenges in the publishing industry, particularly how book distribution to the non book-store outlets (grocery Stores, drug stores) became a victim of over efficiency, and lost their effectiveness.
Cory Dcotorow writes a post in Boing Boing about how super-sizing the distribution networks for these outlets has essentially squeezed profit margins for the publishers, but also led to there being homogeneous offering of about 100 titles in these outlets nationwide. Sadly, when there were smaller independent distributors serving local and regional areas there were varieties of titles peaking the interests of readers and getting them interested in reading more. Clearly, in this sense the hyper efficiency and eye towards profit margins has potentially set the industry back by crating demand for only a few select writers, not encouraging writers to expand their horizons.