Chapter

Growth of the Firm and Industry

Maurice FitzGerald Scott

in A New View of Economic Growth

Published in print June 1991 | ISBN: 9780198287421
Published online November 2003 | e-ISBN: 9780191596872 | DOI: http://dx.doi.org/10.1093/0198287429.003.0009

Series: Clarendon Paperbacks

 Growth of the Firm and Industry

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We now consider a non‐representative firm that is growing faster or slower than the whole economy, but which still satisfies the stylized facts of growth (chapter 2). The relative price of its output must then stay constant, and it is the level of this price that determines its rate of growth. A higher price is shown to be equivalent to a once‐and‐for‐all improvement in investment opportunities. Monopoly, diversification, borrowing, and managerial as opposed to shareholder objectives are all discussed, and animal spirits, which counter monopoly, are given an important role.

Keywords: animal spirits; borrowing; diversification; investment opportunities; managerial objectives; monopoly; non‐representative firm; relative price

Chapter.  20615 words.  Illustrated.

Subjects: Economic Development and Growth

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