Introduction

All foregoing analyses have assumed a homogeneous corporate sector; that is, the economy has been assumed to consist of a single type of firm – big corporations in which control is separated from ownership and the management of which requires highly specialized skills. No entry into the corporate sector has been assumed possible. This description of firms, I believe, applies well to major companies in advanced economies. It is also true, however, that there are numerous tiny firms: farmers, “Ma-and-Pa” stores, automobile service stations, laundries, pizza restaurants, physicians, and so on. The capital requirement to establish this type of firm may be within the reach of many, if not most, of the people. Likewise, its management may not require the highly advanced skill and complex organization that are needed in big corporations. Of course it requires some entrepreneurial talent and a venturesome spirit to start even a tiny firm; however, it may be oversimplified to argue that no one will, when substantial profits are expected. These facts suggest that it is perhaps more reasonable to assume that those smaller firms with easy entry exist in an economy, in addition to the big corporations we have discussed so far. This final chapter considers the question of whether the results in earlier chapters have to be modified when this coexistence of different types of firms is taken into account.