ABSTRACT
Two factors are usually mentioned as limiting the size of a firm: (1) dis-economies of a large scale; and (2) limitations of market, the expansion of which would require unprofitable price reductions or increases in selling costs. The first of these factors seems to be rather unrealistic. It has no technological basis because, although every plant has an optimum size, it is still possible to have two, three, or more plants. The argument with respect to difficulties of management arising out of large-scale enterprise also seems doubtful since adequate measures of decentralization can always be introduced to meet this problem. The limitation of the size of the firm by the market for its products is real enough but it leaves unexplained the existence of large and small firms in the same industry.
