---
entity_slug: market_size_threshold_effects
evaluator: null
evaluated_at: '2026-02-23T05:48:49.398920'
overall_score: 4.6
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition clearly articulates a specific economic principle about
    the relationship between market size and the viability of specialized production.
    It avoids circularity and captures a distinct threshold concept rather than being
    vague.
- name: source_grounding
  value: 5.0
  max_value: 5.0
  rationale: This concept is directly grounded in Smith's analysis throughout The
    Wealth of Nations, particularly his discussions of how the extent of the market
    determines the division of labour. Smith explicitly argues that small markets
    cannot support the same degree of specialization as large ones.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: The "Exchange" domain is perfectly appropriate since this concept fundamentally
    concerns how market mechanisms and market size affect economic organization. The
    threshold effects are inherently about exchange relationships and market dynamics.
- name: vsm_relevance
  value: 4.0
  max_value: 5.0
  rationale: This entity maps well to S4 (intelligence/environmental adaptation) as
    it describes how economic systems must adapt their internal structure (specialization
    levels) based on environmental constraints (market size). It also relates to S1
    (operations) regarding the feasibility of specialized production units.
- name: explanatory_value
  value: 5.0
  max_value: 5.0
  rationale: This entity provides significant explanatory power by illuminating the
    structural mechanism that links market size to economic efficiency and specialization.
    It explains why certain economic arrangements are viable in some contexts but
    not others, revealing fundamental constraints on economic organization.
---

# Evaluation: Market Size Threshold Effects

## definition_precision — 4.0 / 5.0

The definition clearly articulates a specific economic principle about the relationship between market size and the viability of specialized production. It avoids circularity and captures a distinct threshold concept rather than being vague.

## source_grounding — 5.0 / 5.0

This concept is directly grounded in Smith's analysis throughout The Wealth of Nations, particularly his discussions of how the extent of the market determines the division of labour. Smith explicitly argues that small markets cannot support the same degree of specialization as large ones.

## domain_placement — 5.0 / 5.0

The "Exchange" domain is perfectly appropriate since this concept fundamentally concerns how market mechanisms and market size affect economic organization. The threshold effects are inherently about exchange relationships and market dynamics.

## vsm_relevance — 4.0 / 5.0

This entity maps well to S4 (intelligence/environmental adaptation) as it describes how economic systems must adapt their internal structure (specialization levels) based on environmental constraints (market size). It also relates to S1 (operations) regarding the feasibility of specialized production units.

## explanatory_value — 5.0 / 5.0

This entity provides significant explanatory power by illuminating the structural mechanism that links market size to economic efficiency and specialization. It explains why certain economic arrangements are viable in some contexts but not others, revealing fundamental constraints on economic organization.
