Abstract
The Marshallian conception of a Representative Firm has always been a somewhat unsubstantial notion. Conceived as an afterthought — so far as I am able to discover it does not figure at all in the first edition of the Principles — it lurks in the obscurer comers of Book V like some pale visitant from the world of the unborn waiting in vain for the comforts of complete tangibility. Mr. Keynes has remarked that, “this is the quarter in which in my opinion the Marshall analysis is least complete and satisfactory and where there remains most to do,”1 and others have not been lacking to express similar opinions.2 Marshall himself makes singularly little use of the notion in other writings and, save in one or two instances,3 it does not appear to have been used much since his day. Nevertheless, as is the way with ghosts, it bids fair to outlast many more virile creations. Not offering the same surface for attack, it tends to pass notice, though continuing indirectly to influence thought, and even to raise up for itself more earthy and tangible descendants. In certain recent discussions of applied economics in particular, its influence has been discernible. For this reason, and for the sake of the intrinsic interest of anything suggested by Marshall,4 it seems worth while trying to examine it further.
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Notes
E.g. H.J. Davenport, Value and Distribution: a critical and constructive study (Chicago, 1908), pp. 374–8.
This paper was written and set up before the publication of Professor Pigou’s “An analysis of supply”, Economic Journal, vol. 38 (June 1928), pp. 238–57. It does not contain, therefore, any comment on the use there made of the almost identical concept of the Equilibrium Firm, but I venture to express the hope that the observations I have made upon Marshall’s own construction will not be found to be wholly inapplicable to this interesting and important variation.
Strangely enough, this has actually been done by J.E. Cairnes in his essay on “Political economy and land” (Essays in Political Economy, theoretical and applied [London, 1873], pp. 187–231). But the results there achieved are not such as to recommend the general adoption of the notion.
See the very interesting letter to J.B. Clark in Memorials of Alfred Marshall, ed. A.C. Pigou (London, 1925), p. 415.
On all this see H.J. Davenport, The Economics of Enterprise (New York, 1913), pp. 64 and 77–83.
The existence of such economies has been questioned both by Professor Young and by Mr. Robertson, and so far as practical applications of the doctrine are concerned, there seems much to be said for their scepticism. Most of the economies cited by the apologists of this doctrine — improved transport, the telephone, subsidiary industries, etc. — seem to be inappropriate to the consideration of the supply curve of any one industry and to fall rather into the sphere of population theory (see D.H. Macgregor, Industrial Combination [London, 1906], Part I, Chapter I, for a very illuminating discussion of external economies); while it must be remembered that much of the plausibility of Marshall’s exposition depends upon his assumption that internal and external economies vary together — an assumption which I submit is quite illegitimate. The whole doctrine of internal and external economies as presented by Marshall seems, indeed, radically in need of revision. But, for purposes of pure theory, it is legitimate to contemplate the situation in question, if only to exhibit the other anomalies of his exposition.
Hubert D. Henderson, Supply and Demand (London and Cambridge, 1922), pp. 59–60.
An Inquiry into the Nature and Causes of the Wealth of Nations, ed. E. Cannan (London; 1904), p. 17.
R.G. Hawtrey, The Economic Problem (London, 1926), p. 40.
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© 1997 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Robbins, L. (1997). The Representative Firm. In: Howson, S. (eds) Economic Science and Political Economy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12761-0_2
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