ABSTRACT
The representative firm was part of Alfred Marshall’s answer to the problem of constructing an industry supply curve which shows in a two-dimensional own-price/output space an inclusive relationship involving other prices and other quantities. The characteristics of the representative firm must be defined in accord with this aim. The representative firm can be utilised to bridge the gap between Marshall’s dynamic analysis of the industry and his static analysis of equilibrium. Marshall first used the expression 'representative firm' in the second edition of his Principles of Economics published in 1891, and the idea was driven out of the literature around 1928, when it was replaced by Pigou’s ‘equilibrium firm’. The cost controversy consisted of a series of papers – predominately published in the Economic Journal in the 1920s and early 1930s – debating aspects of Marshallian economics.
