Question

Why did forming corporations allow big business to increase in power and profitability?

Answer 1

First, governments in most countries have created laws against monopolies for large corporations, which prevents that corporations have influence or power to weaken or do away with the smaller companies that are forming and gaining power and profitability. Second, large corporations use this as a way to gain competitiveness and revitalize the market, since it is known that where competition does not exist, it falls into mediocrity. Thus, a market where there are several companies that compete, keep alive the economic system, and there is always the possibility for large corporations, to buy the rival company, and gain with all their human capital, ideas, brands and fame of the company. Something like this was seen when Facebook buys WhatsApp for 21.8 billion dollars.