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2.1 Introduction

The point of the first chapter was that free competition will always serve to maximize economic efficiency both because it means that the companies that provide the best value for consumers (or other producers) and that it also means that the difference between price and marginal revenue will be smaller, and so increasing the incentive to expand production. In this chapter, I will demonstrate just how globalization means a deepened level of free competition, by examining more of the benefits of free competition, whilst refuting some of the common objections to free competition over borders.

Globalization means that the scope and depth of globalization is greatly expanded. Indeed, in some sectors it is hardly meaningful to even talk about free competition. This can be analyzed from several different perspectives.

2.2 Economies of Scale & Globalization.

To understand the importance of globalization in increasing the potential advantages of economies of scale, we should recall the discussion we had in the previous chapter about just how expensive it would be for single individual firms to produce cars. For a single individual to build a single car would take years of education and efforts and at least hundreds of euros in equipment and input. Including the opportunity cost of not working with other jobs, the total cost would be several hundreds of thousands of euros. Compare that to the cost of modern cars of €10,000 to €20,000 for the more regular models now that cars are produced in large companies with tens or hundreds of thousands of employees.

It should be evident that simply working together with one person can reduce the cost per person for producing one car for each person. That way one person can concentrate on learning some of the aspects of building a car, while the other person can concentrate on learning the other

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