The Vanishing Hand theory is a concept first conceived of by economist Richard Normand Langlois.
In other words, the large scale industries arising began to provide larger social benefits due to managerial presence and long-term scope rather than perfectly competitive markets.
In broad strokes, my story is this: when markets are thin and market-supporting institutions weak, technological change, especially systemic change, leads to increased vertical integration, since in such an environment centralized ownership and control may reduce “dynamic” transaction costs; but when markets are thick and market-supporting institutions well developed, technological change leads to vertical disintegration, since in that environment the benefits of specialization and the division of labor outweigh the (now relatively smaller) transaction costs of contracting.
[9] Many of the large, vertically-integrated corporations of the past have broken up in recent years into more specialized firms due to the removal of barriers to trade, such as outsourcing.
[7] It is likely, therefore, that as integration becomes costlier in comparison to alternatives, large firms are more likely disintegrate to varying degrees and have a loosened managerial presence, although complete return to a Smithian market is unlikely.