Key Concepts

Expansion of Markets

When you can trade with only a limited pool of partners, you also limit your potential success. Greater productivity is only to your advantage if you can find people who want what you’re producing. So Smith argued for expansion of the markets—i.e. global trading. Compare the idea of only being able to sell your widgets to people in the five miles around where you live...with the idea of being able to sell widgets to the “expanded market” that includes the entire globe.