The Public Interest

Preface to Schelling

The Editors

Fall 1971

Contemporary economic theory has had great difficulty in fitting the modern corporation into its analytical framework. More than thirty years ago, such theorists as E. H. Chamberlin and Joan Robinson were able to integrate the idea of “imperfect competition” into the neoclassical scheme, but the actions of the corporation do not easily fit the theory of the firm. For example, rico-classical economics assumes that a firm acts to maximize its profits. Yet as Robin Marrts has argued (The Economic Theory of Managerial Capitalism-a study used by Kenneth Gailbraith as the basis of his observations in The New Industrial State) the corporation can seek to maximize growth rather than profit, and as often as not will forego immediate profit in favor of the promise of longer-term growth.

 

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