ABSTRACT

The brief overview of the ‘past’ of the theory of the firm given here consists of a concise discussion of the classical view of production, which does not contain a theory of the firm or even a theory of firm level production, followed by a look at the development of the neoclassical – or textbook – approach to firm level production. The behavioural and managerial models of the firm are discussed next; these being significant since they are some of the first models to look inside the black box that is the neoclassical firm. Finally, there will be a short outline of Harold Demsetz’s view of the neoclassical model.