ABSTRACT
The primary concern of neoclassical theory has been with market in terms of allocative behaviour. The theory of the firm has been developed for the theoretical explanation of the central problem of neoclassical economics, namely, resource allocation. Neoclassical theory of the firm has been developed over the last one hundred years or so within the hands of many economists. Although the idea of the firm as a production function appears there, in the construct there is no special and specific mention of the firm as a significant institution within market economy. The Walrasian-extension conceptualisation of the firm as a production function came to dominate economics during the 1930s, at the expense of the Marshallian more complex treatment of the firm. The description of the firm in technological terms together with that of the environment within which it is assumed to operate, strengthens the idea of single-exit situational determinism.
