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Some economic commentators argue that the benefits of large scale production are so significant that small firms will find it difficult to remain competitive and will eventually go bust. They argue that large firms can benefit from significant economies of scale which allows them to price their products at a level which is beyond the ability of smaller firms. They also argue that the greater profits earned by large firms allows them to spend significant sums on research and development and therefore produce more innovative and attractive products. They also argue that the market power that often comes with increased size enables firms to use both price and non-price competition to destroy their smaller rivals.
However others argue that small firms will continue to make up a significant part of any dynamic economy. They argue that small firms are often more flexible and are better able to adapt to changes in market conditions,therefore they often survive even when larger firms go under. They also suggest that many firms only supply a local market and therefore are likely to remain small
lydiajane74 answered the question on July 5, 2018 at 04:42
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