The Firm in General Equilibrium Theory

Kenneth Arrow

Chapter 3 in The Corporate Economy, 1971, pp 68-110 from Palgrave Macmillan

Abstract: Abstract In classical theory, from Smith to Mill, fixed coefficients in production are assumed. In such a context, the individual firm plays little role in the general equilibrium of the economy. The scale of any one firm is indeterminate, but the demand conditions determine the scale of the industry and the demand by the industry for inputs. The firm’s role is purely passive, and no meaningful boundaries between firms are established. No doubt the firm or the entrepreneur was much discussed and indeed given a central role in the informal parts of the discussion; the role was that of overcoming disequilibria. When profit rates were unequal, profit-hungry entrepreneurs moved quickly, with the end-result of eliminating their functions.

Keywords: Competitive Equilibrium; Price Vector; Initial Endowment; Price Expectation; Feasible Allocation (search for similar items in EconPapers)
Date: 1971
References: Add references at CitEc
Citations: View citations in EconPapers (3)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-01110-0_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349011100

DOI: 10.1007/978-1-349-01110-0_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().