Retrospectives: The Origins of the Representative Agent
This paper examines Alfred Marshall's invention of the representative firm. Marshall first used the representative firm in order to describe an industry supply curve for an industry with heterogeneous firms. Despite Marshall's limited use of the notion, the representative agent was extensively criticized as an ephemeral, useless construct that was unable to account for economic growth and that ignored important heterogeneities. The criticisms succeeded in banishing the representative agent from economics. These initial criticisms are also shown to apply to modern uses of the representative agent as well.
Volume (Year): 10 (1996)
Issue (Month): 2 (Spring)
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- Marshall, Alfred, 1920. "Industry and Trade," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number marshall1920.
- Thomas Mayer, 1998.
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"The equity premium: A puzzle,"
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Elsevier, vol. 15(2), pages 145-161, March.
- Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
- Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
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