This paper argues that economists have been schizophrenic regarding the theory of the firm in a competitive industry. In much (but not all) of their formal mathematical modeling, maximization and equilibrium are taken literally. Ordinarily, however, both maximization and equilibrium are...

Stochastic theories of the firm size distribution explain observed size differences among firms as the consequence of random growth rate differences, accumulated over time. Little attention has thus far been paid, however, to economic interpretation of the abstract stochastic processes involved....