[ShamblingMound]

The author asks:

> So why don’t firms merge to get larger?

But they do. Most industries/sectors trend toward consolidation. Specific examples that come to mind are radio, agriculture, banking, and tech. I did a quick search and found [0], which describes a general tendency toward consolidation as industries mature.

One major reason for consolidation (ignored by the author) is economies of scale: as volume increases, the cost per unit decreases.

On the other side, the author ignores benefits of central control for some things. For example, private railroad companies used to have different gauges for their railroads in order to protect their routes, but that led to unnecessary inefficiencies.

Also, governments have a different mandate than the private sector. Governments are charged with pursuing citizens' values (freedom, equality, security, etc.), but for private sector companies, their goals boil down down maximizing profit.

[0]: https://hbr.org/2002/12/the-consolidation-curve

[bumby]

>Most industries/sectors trend toward consolidation.

This reminded me of the discussion about how "mature" companies often struggle to innovate. The thought was that as companies mature, they tend to get larger and that size forces them to focus more on "maintenance" than innovation. So the way they "innovate" is by acquiring smaller companies (who are still in the innovation phase), resulting in eventual consolidation until a major disrupting event.