In the cell, protein complexes form by relying on specific interactions between their monomers. Excluded volume effects due to molecular crowding would lead to correlations between molecules even without specific interactions. What is the interplay of these effects in the crowded cellular environment? We study dimerization of a model homodimer when the mondimers are free and when they are tethered to each other. We consider a structured environment: Two monomers first diffuse into a cavity of size L and then fold and bind within the cavity. The folding and binding are simulated by using molecular dynamics based on a simplified topology based model. The confinement in the cell is described by an effective molecular concentration C approximately L(-3). A two-state coupled folding and binding behavior is found. We show the maximal rate of dimerization occurred at an effective molecular concentration C(op) approximately = 1 mM, which is a relevant cellular concentration. In contrast, for tethered chains the rate keeps at a plateau when C < C(op) but then decreases sharply when C > C(op). For both the free and tethered cases, the simulated variation of the rate of dimerization and thermodynamic stability with effective molecular concentration agrees well with experimental observations. In addition, a theoretical argument for the effects of confinement on dimerization is also made.