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By 1880 Edison was producing 700 lamps per day at his Harrison, NJ facility. The lamp bulbs themselves were purchased from Corning glass and then assembled at Harrison into an incandescent lamp. In 1880, Edison sold lamps at a loss. He sold 30,000 lamps for 40 cents each, but since it was a new process and a low production number, the per lamp cost was $1.10. Through economies of scale, Edison expected his cost to decrease substantially as the number of lamps he produced increased. In 1881 his cost per lamp dropped to 70 cents, and by 1882 it fell to 37 cents and Edison was making a profit of 3 cents per lamp. By 1884 Edison was selling hundreds of thousands of lamps each year and the lamp cost had fallen all the way to 22 cents per lamp.
Another major improvement was the three-wire system in which Edison put dynamos in series on a circuit. Edison developed it to reduce the required amount of copper wire, but it made electrical systems much more cost effective. On July 4, 1883 Edison’s associates Frank Sprague and William S. Andrews had completed installation of the first three-wire commercial system in Sunbury, PA. Andrews and Sprague hooked up two dynamos in the power station and then wired the town for 500 incandescent lamps in time for its 4th of July celebration.
Edison started the dynamos before sunset and a large crowd gathered in town. Sunbury residents asked Edison and his associates a variety of questions illustrating how new the electrical business really was. The questions included: “What makes the hairpin red hot?” “How do you light it from a distance?” and “Can you blow it out?”
Edison’s business grew quickly, and by 1890 a new generating station had been established in New York City with a 200,000 lamp capacity, and the total capacity of the Edison stations totaled more than 1.3 million lamps.