ABSTRACT
This chapter shows that competition pushed firms up the economy-of-scale curve to the point of diminishing returns. This push was amplified by globalization, which in turn was accelerated by improvements in capital markets, increased deregulation, advancements in transportation, communication, and information technology, and by the lowering of trade barriers. During the Mechanized Period, financial capital was a critical resource as firms raced to buy and build bigger and better machines, plants, and factories in order to capture economies of scale faster than competitors. As more firms entered, the race intensified and the increased competition pushed more firms onto the economy-of-scale curve and pushed them all ever higher up the curve to its point of diminishing returns. Deregulation also played an important role in increasing competition and driving firms up the economy-of-scale curve to the point of diminishing returns.
