Historically big cos use government to keep smaller competitors out.
Just look at internet businesses. They are fairly unregulated and while there are short term market leaders, these are constantly being challenged and eventually replaced by smaller more innovative competitors (90's .com vs. Google vs. yc)
Look at regulated businesses such as banking, auto and telecoms. These are examples where the bigcos itself has lobbied in most of the regulation. They have grown bigger and bigger and are now so big that "they can't fail" even though they actually did.
A truly free market (as libertarians believe we should have) in banking, auto and telecoms would have killed off citibank, gm and att years ago just as Excite, Netscape, AltaVista and others were in our business.
That is a mighty big claim which flies in the face of practical experience.
He points out that government funding of highways acts as a de facto subsidy of Walmart and similar chains by partly socializing the costs of shipping, making it easier to compete with local businesses; and that regulations (which large companies can more easily understand and comply with than smaller companies) provide barriers of entry to industries.
He concludes: "In a free market, firms would be smaller and less hierarchical, more local and more numerous"
(I don't have a strong opinion on this. It sounds plausible but it's a bit anecdotal for my taste.)
But I think we're shifting the discussion a bit to a "Long Emergency" scenario.
As a bit of localist, I'm more troubled by local governments who bend over backward to bring large retailers into an area. I think these more localized benefits (tax breaks, development dollars, etc) are far more beneficial to, say, Wal-Mart, than the highway system.
(1) And many that can have transformed that land into housing and strip malls.
EDIT: Fixed formatting.
Lockheed Martin and Boeing couldn't be as huge as they are without defense contracts either.
Subsidies, government contracts, regulations designed to increase barrier to entry, a legal system which favors those with more resources, beneficial legislation which can be bought through legalized bribery (lobbying and campaign contributions)
The issue is that the government increases complexity and barriers to entry and therefore raising the Coase ceiling of how large an enterprise can become before being less efficient than a coalition of smaller rivals.