The Nature Of The Firm

[NOVEMBER The Nature of the Firm By R. H. COASE ECONOMIC theory has suffered in the ancient from a failure to state clearly its assumptions. Economists in make up a theory have a good deal omitted to judge the foundations on which it was erected. This examination is, however, essential not that to counteract the misunderstanding and needless controversy which arise from a neediness of knowledge of the assumptions on which a theory is based, but as well as beca do of the extreme importance for economics of good judgment in choosing between rival rears of assumptions. For instance, it is suggested that the use of the rule book unfluctuating in economics may be different from the use of the status by the plain man.l Since there is obviously a trend in economic theory towards scratch line summary with the individual firm and not with the industry,2 it is all the more indispensable not only that a clear commentary of the word firm should be given but that it s going from a firm in the authoritative human, if it exists, should be do clear. Mrs. Robinson has tell that t h e two questions to be asked of a set of assumptions in economics a r e : Are they amenable ? and : Do they correspond with the real world ? 3 Though, as Mrs.

Robinson points out, more often adept set will be manageable and the other realistic, except there may well be branches of theory where assumptions may be both manageable and realistic. It is hoped to show in the pursuit subject that a definition of a firm may be obtained which is not only realistic in that it corresponds to what is meant by a firm in the real world, but is tractab! le by two of the most powerful instruments of economic abridgment authentic by Marshall, the thinking of the margin and that of substitution, to requireher endowment the idea of substitution a t 1 2 3 Joan Robinson, I~corro~rrzcs a Serious Subjecr, p. 12. as stick out N. Kaldor, T h e Equilibriuin of the Finn, h c o m m z c J o u r m l , March, 1934 Op. cit., p. 6. 386 19371 T H E NATURE O F T...If you deprivation to get a full essay, order it on our website: BestEssayCheap.com

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