ABSTRACT
This chapter deals with the optimum size of firm in a world of nations of various size and the optimum size of the nation in a world of firms of various size. The notion of optimum size has come into economics most recently from the literature on currency areas. Mundell introduced it in the American Economic Review a decade ago, making the point that a currency should cover an area within which factors of production are mobile, but beyond which they do not normally move in quantity. The optimum currency area, at least for large countries like Canada may be a region, smaller than the nation. Apart from the International Business Machines company, however, there is little evidence that the opportunity was widely seized. International agreement, as on the pitch of the screwthread agreed in World War II between the United States and Britain, is limited primarily to the military field.
