ABSTRACT
This chapter presents a model of the process of business concentration – by which is meant the process whereby large units in general acquire increasing control of the total assets and output of the private sector – based on a theory of internal growth and a theory of mergers. We are interested in business concentration because, inter alia, the growth of large units reduces the scope for small and medium-sized units. (Some realism is required; given that large units are generally more capital intensive than small units, and given the extreme skewness of the size-distribution, a system that is highly concentrated in terms of output or assets may still display a substantial proportion of employment in small units; it is therefore important to know whether our interest in small units is primarily economic, political or sociological.)
