3 ms·
There are some efficiencies that come with scale. For example, it's preferable to have very large utility companies with heavy regulation. I tend to agree that
by msellout 14y ago
There are some efficiencies that come with scale. For example, it's preferable to have very large utility companies with heavy regulation. I tend to agree that scale is unnecessary for investment banking. If an entity needs capital in bulk it can go public.
- deleted 14y ago[deleted]
- seabee 14y agoThe trade off then becomes efficiency of scale vs. tolerance to failure. I would argue that certain sectors, like infrastructure for public utilities, would be negatively impacted by treatment as a free market - the cost of building that infrastructure presents a barrier to competition, so the market isn't terribly 'free' anyway - and gain much more from the efficiency of having a single pipe going to everyone's home which all suppliers use, with everyone paying for the maintenance of their own infrastructure.
- njs12345 14y agoIf you're interested, this is called a natural monopoly: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly