A control theory of the firm applied to Australian Manufacturing, 1964-1971.

This thesis has three purposes: firstly, to define the economic conditions which account for the firm's growth, decline, diversification and maintenance of its existing size; secondly, to derive the optimal time-path(s) for the firm's size index (the capital stock of the firm) resulting from the operation of optimal managerial policies over a planning horizon of fixed and finite length; finally, to compare the econometric performance of the derived definition of the optimal capital stock with competing hypotheses relating to the optimal capital stock. The review of the literature in Chapter 2 shows that the problem has not been systematically treated in the existing corpus of the theory of the firm. A dynamical model suited to the requirements of the problem is formulated in Chapter 3. The firm is viewed as a control system in which the controllers (the firm's management) manipulate certain policy variables to achieve a particular criterion - the intertemporal maximisation of expected profitability over a planning horizon of fixed and finite length.