Walras's theory of the entrepreneur

SummaryThis paper tries to dispel the obscurity into which Leon Walras's theory has fallen as a result of misunderstandings and decades of neglect. An exposition of the three parts of the theory is given: Walras's definition of the entrepreneur, an account of the entrepreneur's role in effectuating dynamic market adjustments, and a description of his situation in an equilibrium state of the market. Criticisms of the theory are evaluated, its contributions are identified, and its impact upon the work of Pareto, Barone, and Schumpeter is documented. It is concluded that the theory was a significant addition to economic analysis, providing the foundation and inspiration for some important aspects of the modern theory of the entrepreneur and of profits.

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