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

Zhong-Yuan Han, Shu-Lin Wang


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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Journal of Management and Strategy
ISSN 1923-3965 (Print)   ISSN 1923-3973 (Online)


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