ABSTRACT
In the history of economic thought, the highly relevant theme of income distribution recognizes two main strands of research, the functional and the personal distribution of income. Forerunner of the former are Cantillon (1755), A. R. J. Turgot and J. B. Say. In particular, Cantillon already considered four factors of production, that is, labor, capital, land and entrepreneur, being salary, interest, rent, and profit their respective rates of return. He rightly called certain remuneration salary, interest, and rent, while profit was referred to as an uncertain remuneration. It is worthwhile to observe that the addition of the certain remuneration plus the imputed profit, that is, the ex-ante uncertain or expected remuneration, determine the ex-ante value added. Adding to them the costs of raw materials and intermediate inputs determine the good or service price at factors cost. Instead, the selling price of a good or service determines its market price. Subtracting from it the certain remuneration plus the costs of raw materials and intermediate inputs determine the ex-post or realized profit, which can be positive, negative or null. Hence, ex-post profit is a residual.
