Profits as a rich source of puzzlement

Abstract

Profits are both a strategic and a little understood income category. Theoretical approaches differ widely. The author says that many different answers are given to at least seven questions: What is meant by profits? What is the level of profits in a given country, say, the Netherlands? Does a profit squeeze exist? What determines profits? Which variables are determined by profits? How should profits be handled in model-building? How can a government influence profits? In surveying some of the answers to these seven questions the author criticizes Wood's theory and discusses the concept of normal profits.