The Theory of the Firm and the Theory Of economic Growth

An Essay on the Economics of Institutions, Competition, and the Capacity of the Political System to Cope with Unexpected Change
  • Gunnar Eliasson
Part of the Recent Economic Thought book series (RETH, volume 36)


The nature of the firm, as we understand it, is totally conditioned by themarket environment in which the firm is operating. This is true for the realas well as for the theoretical firm. In attempting to link the behavior of the firm to the growth process of a national economy, it thus becomes importantto present a theoretical firm that is as close as possible to a real firm of acapitalistically organized market economy. As we will see, this will forceus also to discuss economic growth in terms of a realistic model representation of the dynamics of firm behavior in markets, in fact, making aggregation endogenous and explicit.


Market Economy Evolutionary Approach Industrial Revolution Creative Destruction Firm Behavior 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Block, M. 1966. Land and Work in Medieval Europe. London: Routledge and Kegan Paul.Google Scholar
  2. Carlsson, B. 1980. “The Content of Productivity Growth in Swedish Manufacturing.” In The Firms in the Market Economy, 40 years 1939–1979. Stockholm: IUI.Google Scholar
  3. Carlsson, B. 1983a. “Industrial Subsidies in Sweden: Macro-Economic Effects and an International Comparison.” Journal of Industrial Economics 32(1): 1–23.CrossRefGoogle Scholar
  4. Carlsson, B. 1983b. “Industrial Subsidies in Sweden: Simulations on a Micro-to-Macro Model.” In Microeconometrics, IUI Yearbook 1982–1983. Stockholm: IUI.Google Scholar
  5. Carlsson, B. 1989. “The Evolution of Manufacturing Technology and Its Impact on Industrial Structure: An International Study.” Small Business Economy 1(1):21–37CrossRefGoogle Scholar
  6. Carlsson, B. 1991. “Productivity Analysis: A Micro-to-Macro Perspective.” In Technology and Investment—Crucial Issues for the 1990s. E. Deiaco, E. Hörnell,and G. Vickery, eds. London: Pinter.Google Scholar
  7. Carlsson, B. 1992. “Industrial Dynamics and the Role of Small Plants in SwedishManufacturing Industry 1968–1988.” Paper presented at the conference on Management of Technology, Grenoble, October 13–14,1992, IUI Working Paper No. 348, Stockholm: IUI.Google Scholar
  8. Carlsson, B., Dahmén, E., Grufman, A., Josefsson, M., and Örtengren, J. 1979. Teknik och industristruktur—70-talets ekonomiska kris i historisk belysning (Swedish Technology and Industrial Structure—the Crisis of the Seventies in Historic Perspective). Stockholm: IUI and IVA.Google Scholar
  9. Carlsson, B., Bergholm, F., and Lindberg, T. 1981. Industristödspolitiken och dessinverkan på samhällsekonomin (Industry Subsidy Policy and its MacroeconomicImpact). Stockholm: IUI.Google Scholar
  10. Chandler, A.D. 1977. The Visible Hand: The Managerial Revolution in AmericanBusiness. Cambridge: Harvard University Press.Google Scholar
  11. Day, R.H., Eliasson, G., and Wihlborg, C. (eds.). 1993. The Markets for Innovation, Ownership and Control. Amsterdam: North-Holland and Stockholm: IUI.Google Scholar
  12. Eliasson, G. 1976. Business Economic Planning—Theory, Practice and Comparison. London: John Wiley & Sons.Google Scholar
  13. Eliasson, G. 1977. “Competition and Market Processes in a Simulation Model of the Swedish Economy.” American Economic Review 67(1):277–281.Google Scholar
  14. Eliasson, G. 1978. A Micro-to-Macro Model of the Swedish Economy. IUI Conference Reports 1978:1. Stockholm: IUI, p. 1.Google Scholar
  15. Eliasson, G. 1983. “On the Optimal Rate of Structural Adjustment.” In PolicyMaking in a Disorderly World Economy. G. Eliasson, M. Sharefkin and B.-C. Ysander, eds. IUI Conference Reports 1983:1. Stockholm: IUI, p. 1.Google Scholar
  16. Eliasson, G. 1984. “Micro Heterogeneity of Firms and the Stability of IndustrialGrowth.” Journal of Economic Behavior and Organization 5:249–274.CrossRefGoogle Scholar
  17. Eliasson, G. 1985a. The Firm and Financial Markets in the Swedish Micro-to-MacroModel—Theory, Model and Verification. Stockholm: IUI.Google Scholar
  18. Eliasson, G. 1985b. “De svenska storföretagen—en studie av internationaliseringenskonsekvenser for den svenska ekonomin.” In De svenska storföretagen (The GiantSwedish Industrials). G. Eliasson et al. Stockholm: IUI, pp. 7–70.Google Scholar
  19. Eliasson, G. 1986a. “On the Stability of Economic Organizational Forms and the Importance of Human Capital: A Proposition about the Endogenous, MarketInduced Disintegration of the Non-Market Sector.” In The Dynamics of MarketEconomies. R.H. Day, and G. Eliasson, eds. Amsterdam: North-Holland and Stockholm: IUI, pp. 454–467.Google Scholar
  20. Eliasson, G. 1986b. “Kompetens, kommunikation och kunskapsuppbyggnad—sammanfattning och arbetshypotes för industripolitiken.” In Kunskap, information och tjänster (The Manufacturing Firm as an Information Processer andService Producer). G. Eliasson, B. Carlsson, E. Deiaco, T. Lindberg, and T. Pousette, eds. Stockholm: IUI, pp. 9–38.Google Scholar
  21. Eliasson, G. 1987. “Technological Competition and Trade in the ExperimentallyOrganized Economy,” IUI Research Report No. 32. Stockholm: IUI.Google Scholar
  22. Eliasson, G. 1988a. “Schumpeterian Innovation, Market Structure and the Stabilityof Industrial Development.” In Evolutionary Economics, Applications of Schumpetefs Ideas. H. Hanusch, ed. Cambridge, UK: Cambridge University Press, pp. 151–199.Google Scholar
  23. Eliasson, G. 1988b. “The International Firm: A Vehicle for Overcoming Barriersto Trade and a Global Intelligence Organization Diffusing the Notion of a Nation.” IUI Booklet No. 295. Stockholm: IUI.Google Scholar
  24. Eliasson, G. 1990a. The Knowledge Based Information Economy. In Eliasson, G. et al. The Knowledge Based Information Economy. Stockholm: IUI.Google Scholar
  25. Eliasson, G. 1990b. “The Firm as a Competent Team.” Journal of Economic Behavior and Organization 13(3):275–298.CrossRefGoogle Scholar
  26. Eliasson, G. 1990c. “The Firm, its Objectives, its Controls and its Organization.” IUI Working Paper No. 266. Stockholm: IUI.Google Scholar
  27. Eliasson, G. 1991a. “Deregulation, Innovative Entry and Structural Diversity as a Source of Stable and Rapid Economic Growth.” Journal of Evolutionary Economics (1):49–63.CrossRefGoogle Scholar
  28. Eliasson, G. 1991c. “Modeling the Experimentally Organized Economy; Complex Dynamics in an Empirical Micro-Macro Model of Endogenous Economic Growth.” Journal of Economic Behavior and Organization 16(1–2):153–182.CrossRefGoogle Scholar
  29. Eliasson, G. 1991d. “The Micro Frustrations of Privatizing Eastern Europe.” IUI Working Paper No. 306. Stockholm: IUI.Google Scholar
  30. Eliasson, G. 1991e. “Financial Institutions in a European Market for ExecutiveCompetence”. In C. Wihlborg, M. Fratianni and T.D. Willetts, eds. Financial Regulation and Monetary Arrangements after 1992. Amsterdam: Elsevier Science B.V., pp. 149–166.Google Scholar
  31. Eliasson, G. 1992a. “Business Competence, Organizational Learning and EconomicGrowth-Establishing the Smith-Schumpeter-Wicksell (SSW) Connection.” In Entrepreneurship, Technological Innovation, and Economic Growth. Studies in the Schumpeterian Tradition. F.M. Scherer and M. Perlman, eds. Ann Arbor: The University of Michigan Press.Google Scholar
  32. Eliasson, G. 1992c. “A Note: On Privatization, Contract Technology and Economic Growth.” IUI Working Paper No. 339, Stockholm. To appear in R.H.Day, G. Eliasson and C. Wihlborg, eds. (1993).Google Scholar
  33. Eliasson, G., and Lindberg, T. 1981. “Allocation and Growth Effects of CorporateIncome Taxes.” In Business Taxation, Finance and Firm Behavior. G. Eliassonand J. Sodersten, eds. IUI Conference Reports 1981:1, Stockholm: IUI, pp. 381–435.Google Scholar
  34. Eliasson, G., and Taymaz, E. 1992. “The Limits of Policy Making: An Analysis of the Consequences of Boundedly Rational Government using the Swedish Micro-to-Macro model (MOSES).” IUI Working Paper No. 333. Stockholm: IUI.Google Scholar
  35. Granstrand, O. 1986. “On Measuring and Modelling Innovative New Entry in Swedish Industry.” In The Dynamics of Market Economies. R.H. Day and G. Eliasson, eds. Amsterdam: North-Holland and Stockholm: IUI, pp. 295–310.Google Scholar
  36. Granstrand, O., and Sjölander, S. 1990. “The Acquisition of Technology and Small Firms by Large Firms.” Journal of Economic Behavior and Organization 13(3):367–386.CrossRefGoogle Scholar
  37. Holmström, B. 1989. “Agency Costs and Innovation.” Journal of Economic Behaviorand Organization 12(3):305–327.Google Scholar
  38. Jagren, L. 1988. “Företagens tillväxt i ett historiskt perspektiv.” In Expansion,avveckling och företagsvardering i svensk industri. J. Örtengren et al. Stock-holm: IUI.Google Scholar
  39. Knight, F. 1921. Risk, Uncertainty and Profit Boston: Houghton-Mifflin.Google Scholar
  40. Lindh, T. 1993. “Lessons from Learning About Rational Expectations.” In R.H. Day, G. Eliasson and C. Wihlborg, eds. (1993), pp. 81–115.Google Scholar
  41. Loasby, B J. 1991. “Alfred Marshall’s Connecting Principles of Firms and Markets.” Paper presented to the RES Annual Conference, University of Warwick, April 8, 1991.Google Scholar
  42. Mill, J.S. 1848. Principles of Political Economy with Some of Their Applications to Social Philosophy. London.Google Scholar
  43. North, D., and Thomas, P. 1973. The Rise of the Western World. Cambridge: Cambridge University Press.Google Scholar
  44. Pratten, C. 1976. A Comparison of the Performance of Sweden and UK Companies. Cambridge, UK: Cambridge University Press.Google Scholar
  45. Salter, W.E.G. 1960. Productivity and Technical Change. Cambridge, UK: Cam-bridge University Press.Google Scholar
  46. Schumpeter, J.A. 1912. (English edition 1934). The Theory of Economic Development, Harvard Economic Studies, Vol. XLVI. Cambridge: Harvard University Press.Google Scholar
  47. Schumpeter, J.A. 1942. Capitalism, Socialism and Democracy. New York: Harper & Row.Google Scholar
  48. Simon, H.A. 1955. “A Behavioral Model of Rational Choice.” Quarterly Journal of Economics 69:99–118.CrossRefGoogle Scholar
  49. Smith, A. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. New York: Modern Library, 1973.Google Scholar
  50. Stigler, G.J. 1951. “The Division of Labor is Limited by the Extent of the Market.” Journal of Political Economy 59:185–193.CrossRefGoogle Scholar
  51. Wicksell, K. 1898. Geldzins und Güterpreise (Interest and Prices). New York: AMK Bookseller, 1965.Google Scholar

Copyright information

© Kluwer Academic Publishers 1994

Authors and Affiliations

  • Gunnar Eliasson
    • 1
  1. 1.StockholmSweden

Personalised recommendations