Open AccessTheory on the Functions of A Firm: A Resolution to Smith’s Dilemma
Author(s) -
Zhongyuan Han,
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.