Mill and Marx both saw this effect but did not fully describe it. Economies of scale implied that a small number of large producers could operate with a lower unit cost than than could a large number of smaller firms ceteris paribus . Therefore, perhaps the major assumption of the competitive market was being challenged by itself. Marshall thought that when theory and realism conflict, ordinary observation should come first. But, in reality, there is a general market with all kinds of changing factors.
Firms are like biological organisms.
Firms, like animals, have life cycles of expansion, decline and death. Companies may expand to a point but then lose the vigour of those who led it in the times of expansion. These ideas led Marshall to be optimistic. Economies of scale were unlikely to challenge a severe challenge to competition. The 'special markets' within which firms could enjoy unique privileges can not be maintained.