> If the market was regulated to set a cap on the size of a single company's workforce (or some other metric, perhaps market capitalisation), we'd also avoid th

> If the market was regulated to set a cap on the size of a single company's workforce (or some other metric, perhaps market capitalisation), we'd also avoid the 'too big to fail' problem we have at the moment. I don't think either of the metrics you mention would solve the "too big to fail" phenomenon. The fact is that "too big to fail" is a misnomer, which has actually been used to represent the concept "too connected to fail". I.e. it is not Bear's/AIG's pure size that prevents us from allowing them to fail, it's the connectedness that they have in our financial system, which depends on a web of millions of transactions per day between every large bank. Then, if a big bank were allowed to fail (not that I'm endorsing this theory), that would cause a cascade effect where banks started charging higher rates for those millions of transactions, which would cause less of them to happen, which would cause even higher rates, etc. etc., ending in a completely broken financial system where each bank wanted too much money for each of the many transactions they depend on to exist in their current form. So, I don't think that limiting the size of companies in the financial sector would prevent the "too big to fail" phenomenon by itself. Which doesn't mean it's not a good idea; just that I think that particular example doesn't suport the idea that well. (edit: and read Coase, like davidw's comment suggests :)