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# Domestic Market Size Effects

## Definition

The influence of market size on economic efficiency, specialization, and division of labor. Smith argues that larger markets enable greater specialization and more efficient production than smaller, protected markets.

## Source Chapter

Book IV, Chapter 2

## Context

Smith examines how the size of domestic markets affects economic efficiency, arguing that protectionist policies that limit market size ultimately reduce the benefits of specialization and division of labor.

## Economic Domain

Exchange

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