  In developing the theory of long-run competitive equilibrium (LRCE), Marshall
(1890) used the notion of a representative firm. The identity of this firm,
however, remained unclear. Subsequent theory either focused on the case where
all firms are identical or else incorporated heterogeneity but disregarded the
notion of a representative firm. Using Hopenhayn's (1992) model of competitive
industry dynamics, we extend the theory of LRCE to account for heterogeneous
firms and show that the long-run supply function can indeed be characterized as
the solution to the minimization of a representative average cost function.
