A giant established firm is no less likely than a small upstart firm to suffer losses if it supplies a good that most consumers consider inferior to similar products or whose costs of production turn out to surpass its selling price because of inefficient production techniques. The competitive process determines precisely the optimum size as well as the number of firms producing any given product. It does so by exerting unrelenting pressure on entrepreneurs, in the form of prospective profit and loss, to continually seek out the lowest-cost techniques for combining and transforming scarce resources. The irresistible power of the competitive market process to revolutionize the structure of long-established industries at a moment's notice is manifested time and again in U.S. business history. The steel, bookselling, and computer industries are three recent, dramatic examples.
Antitrust policy can only stifle and distort the real-world competitive process.
This statement, while true, misses the point. Giants like IBM and U.S. Steel were indeed brought to their knees by competition from small companies that were the first to recognize the commercial potential of a new technology. In probably many more instances, superior entrepreneurial forecasting and the economic efficiency of large firms have driven small firms from the field. The competitive process operates to produce a size of firm that tends to ensure the lowest costs of production. Some 299 other automobile firms competed with Ford Motor Co. in 1910, most of which were driven out of business after Henry Ford pioneered the moving assembly line, which rendered the mass production of autos commercially viable.