On the Theory of Expansion of the Firm

William Baumol

Chapter 3 in Readings in Industrial Economics, 1972, pp 34-45 from Palgrave Macmillan

Abstract: Abstract Economists who have spent time observing the operations of business enterprises come away impressed with the extent of management’s occupation with growth. Expansion is a theme which (with some variations) is dinned into the ears of stockholders, is constantly reported in the financial pages and in the journals devoted to business affairs. Indeed, in talking to business executives one may easily come to believe that growth of the firm is the main preoccupation of top management. A stationary optimum would doubtless be abhorrent to the captains of industry, whose main concern is surely not at what size their enterprises should finally settle down (except where sheer size endangers their standing with the administrators of the antitrust laws) but rather, how rapidly to grow.2

Keywords: Cost Curve; Marginal Revenue; Profit Rate; Pure Competition; Advertising Outlay (search for similar items in EconPapers)
Date: 1972
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DOI: 10.1007/978-1-349-15484-5_3

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