Managerial models of the firm

This paper deals with a broad and controversial part of microeconomic theory represented by the theory of the firm. An overview of the main line of criticism of the orthodox (classical) theory of the firm and also of the theories proposed as reactions to one or more aspects of this criticism is given. However, the attention is attached to managerial theories of the firm, which are represented especially by the models of Baumol, Williamson and Marris. In each case the assumptions of the particular theory are stated, followed by graphical and mathematical exposition of its main conclusions. Finally, the paper concludes with a brief discussion of the contributions and setbacks of managerial theories.

Keywords: Classical theory, Scitovsky model, Agency theory, Baumol model, Williamson model, Marris model