| Economics of scale is not a universal law that means bigger is always better. There is also the opposite effect where larger is bad. The point of having a market is to find the balance between economics of scale and limit of the firm. The reason why economist want markets in the first place, is because that's how we find if it is more effective to have a few large players, like Airplanes, or millions of small players like Restaurants or Hotels. The Soviet Union built the biggest Truck factory ever (or at least at that time), but it did not produce cost efficient Trucks. Why? They clearly had economics of scale. As for evidence, I would start with "The Theory of the Firm" witch founded a hole new branch of economics and from there you have 60 years of research. There is a hole branch of economics called 'Industrial Organisation'. The simplest bit of evidence is that you can literally just count the amount of companies that exist. If Marx was right we should observe fewer and fewer companies in a predictable linear process. > just like political systems that favor large parties (like the US system) will favor fewer parties. The US system may favor large parties but it not inherently centralizing. There is no tendency to a monopoly party. |