The Representative Firm

The Marshallian conception of a Representative Firm has always been a somewhat unsubstantial notion. Conceived as an afterthought — so far as I am able to discover it does not figure at all in the first edition of the Principles — it lurks in the obscurer comers of Book V like some pale visitant from the world of the unborn waiting in vain for the comforts of complete tangibility. Mr. Keynes has remarked that, “this is the quarter in which in my opinion the Marshall analysis is least complete and satisfactory and where there remains most to do,”1 and others have not been lacking to express similar opinions.2 Marshall himself makes singularly little use of the notion in other writings and, save in one or two instances,3 it does not appear to have been used much since his day. Nevertheless, as is the way with ghosts, it bids fair to outlast many more virile creations. Not offering the same surface for attack, it tends to pass notice, though continuing indirectly to influence thought, and even to raise up for itself more earthy and tangible descendants. In certain recent discussions of applied economics in particular, its influence has been discernible. For this reason, and for the sake of the intrinsic interest of anything suggested by Marshall,4 it seems worth while trying to examine it further.