Theory on the Functions of A Firm: A Resolution to Smith’s Dilemma | Zendy

Han Zhong-yuan | Zendy; Shulin Wang | Zendy

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Theory on the Functions of A Firm: A Resolution to Smith’s Dilemma

Author(s) -

Han Zhong-yuan,

Shulin Wang

Publication year - 2012

Publication title -

journal of management and strategy

Language(s) - English

Resource type - Journals

eISSN - 1923-3973

pISSN - 1923-3965

DOI - 10.5430/jms.v3n1p18

Subject(s) - dilemma , mathematical economics , adam smith , perfect competition , conjecture , economics , resolution (logic) , neoclassical economics , mathematics , philosophy , pure mathematics , computer science , epistemology , artificial intelligence

Based on Stigler’s (1951) conjecture, this article reproves the Smith theorem (the division of labor is limited by the extent of the market), via a framework of perfect competitive market, consequently offering a solution to Smith’s dilemma which usually refers to the incompatibility between the Smith theorem and the theory of competitive price.

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