In a market free from intervention firms can naturally become only so large. The inefficiencies of bureaucracy limit their sizes. For example, if a firm is vertically integrated — originally expanded in this manner to capture efficiency — but it becomes excessively large, then it begins to lose the ability to rationally allocate resources. Wages and factor prices in the internal (in-house) market begin to have no connection to the real market, become distorted and unrealistic, preventing the firm from being able to calculate. Smaller firms without these errors will begin to out-compete these overly bureaucratic firms.

When interventionist laws protect certain types of business ownerships by limiting the liability of the owners, it artificially encourages these firms to become very large since they are protected from the costs associated with damages to the property rights of independent third parties. In other words they are too large of an entity to fight a legal battle against, plus finding out who exactly is responsible is very, very difficult. Therefore, limited liability for corporations causes distortions. Protection of property rights will ultimately make the economy serve the whole of mankind with justice rather than favoring institutions that are created by vested interests and which use intervention in an attempt to circumvent the forces of equilibrium.
From MORE THAN LAISSEZ-FAIRE