Why do firms seek to grow larger and are large firms in the public interest, Reasons for large firms are they better than small firms.
Firms seek to grow larger for many different reasons some of these reasons will benefit the firm others will benefit the consumers. The first reason is they want to own the most market share in whatever good they are selling preferably over 25%. They want to own this amount of market share (market segment) because then the government will then recognise this company as a monopoly, this is very good for any firm that wants to make big profits which is most of them. The advantages of a monopoly are the company can enjoy economies of scale this means cost of savings because of size-if you produce more you can save money because you can buy in bulk and get something knocked off the price because you are buying so much hence the reason of wanting to grow bigger. The larger the firm is the more the capital costs are going to be for another firm wanting to enter the market this acts as a barrier to any other firm that wants to provide competition for the big firm. The main barrier for large firms to stay large is a patent, this protects the companies products from any other firm that wants to copy their product, a patent lasts for years depending on the type of product. This method is very similar to the copyright method, which prevents written things being copied. To stay large the company can use marketing barriers this means they spend a lot of money on advertising so the public goes and buys their product meaning chances of success for a smaller firm is very low because they don't have the money to compete.
Firms seek to grow larger for many different reasons some of these reasons will benefit the firm others will benefit the consumers. The first reason is they want to own the most market share in whatever good they are selling preferably over 25%. They want to own this amount of market share (market segment) because then the government will then recognise this company as a monopoly, this is very good for any firm that wants to make big profits which is most of them. The advantages of a monopoly are the company can enjoy economies of scale this means cost of savings because of size-if you produce more you can save money because you can buy in bulk and get something knocked off the price because you are buying so much hence the reason of wanting to grow bigger. The larger the firm is the more the capital costs are going to be for another firm wanting to enter the market this acts as a barrier to any other firm that wants to provide competition for the big firm. The main barrier for large firms to stay large is a patent, this protects the companies products from any other firm that wants to copy their product, a patent lasts for years depending on the type of product. This method is very similar to the copyright method, which prevents written things being copied. To stay large the company can use marketing barriers this means they spend a lot of money on advertising so the public goes and buys their product meaning chances of success for a smaller firm is very low because they don't have the money to compete.
