Introduction

The role that big businesses perform in the national economy has triggered numerous theoretical interests, which can be broadly categorised into two schools. The mainstream school prefers small and medium-sized enterprises (SMEs) to big businesses because the former in a perfect competition is believed to bring about allocative efficiency, whereas the latter is believed to be more often than not associated with monopoly or oligopoly, and to deviate from allocative efficiency. Big businesses in the form of monopolistic and oligopolistic firms are believed to hinder free competition. According to Marshallians, big businesses will lose their dominant positions in the long run (Marshall, 1920: 315-6).

In contrast, the non-mainstream approach argues that big businesses (often monopoly or oligopoly) could benefit the economy in the long run. The Schumpeterian theorem demonstrates through a process of creative destruction, monopolies or oligopolies are more conducive to growth than perfect competition (Schumpeter, 1976). Scherer (1996) points out that monopolistic or oligopolistic competition exists in a wide array of industries in the United States. Whether or not oligopolies and monopolies cause lower welfare depends on individual industries. Nolan et al. (2002) demonstrate that in the era of the global big business revolution, the number of players in industry after industry has fallen dramatically and global competition among oligopolistic firms has been vastly intensifying. In terms of a giant firm's limit, Edith Penrose (1995) suggests that a firm's size has no theoretical limits because a firm can always expand with the aid of managerial resources and research capabilities.