Socially optimal firm size

The socially optimal firm size is the size for a company in a given industry at a given time which results in the lowest production costs per unit of output. The socially optimal firm size is the size for a company in a given industry at a given time which results in the lowest production costs per unit of output. If only diseconomies of scale existed, then the long-run average cost-minimizing firm size would be one worker, producing the minimal possible level of output. However, economies of scale also apply, which state that large firms can have lower per-unit costs due to buying at bulk discounts (components, insurance, real estate, advertising, etc.) and can also limit competition by buying out competitors, setting proprietary industry standards (like Microsoft Windows), etc. If only these 'economies of scale' applied, then the ideal firm size would be infinitely large. However, since both apply, the firm must not be too small or too large, to minimize unit costs.