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Theory on the Functions of a Firm: A Resolution to Smith¡¯s Dilemma

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  • Zhong-Yuan Han
  • Shu-Lin Wang

Abstract

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.

Suggested Citation

  • Zhong-Yuan Han & Shu-Lin Wang, 2012. "Theory on the Functions of a Firm: A Resolution to Smith¡¯s Dilemma," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 3(1), pages 18-31, February.
    • Handle: RePEc:jfr:jms111:v:3:y:2012:i:1:p:18-31
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    References listed on IDEAS

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