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The emergence of the theory of the firm: from Adam Smith to Alfred Marshall

Williams, Philip Laurence (1977) The emergence of the theory of the firm: from Adam Smith to Alfred Marshall. PhD thesis, London School of Economics and Political Science.

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The theory of the firm's production and selling decisions is traced from the eighteenth century until the death of Marshall. Some tentative judgments are proposed as to the goodness and badness of the principal strands in this development. Apart from the first chapter (devoted to method) and the final chapter (devoted to post-Marshallian developments and empirical evidence), the thesis consists of three studies based on Adam Smith, J.S.MiU, and Alfred Marshall respectively. Each of these writers is considered in relation to preceding and contemporaneous work. Adam Smith outlines a model in which the long-run equilibrium of resource allocation between industries requires that the rate of return on capital be equal among industries (making allowance for differences in agreeableness and risk). Monopoly is defined as an impediment to the resource flow which would otherwise bring the equilibrium about. Following The Wealth of Nations, writers increase the empirical content of this model by elaborations with respect to observed phenomena (J .S.Mill) end with respect to the time path by which equilibrium is approached (Marshall). An alternative approach to the theory of price is to classify markets according to certain structural characteristics and to derive equilibrium and stability conditions for each market structure. The multiplication of these models since the time of Cournot has robbed them, of empirical content. Further, the structural assumptions of the models seem to limit the outcomes of modelled behaviour to actions which do not: alter that structure.

Item Type: Thesis (PhD)
Additional Information: © 1977 Philip Laurence Williams
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Supervisor: Yamey, Basil and Blaug, Mark

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