Profits as a rich source of puzzlement

Summary 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.Thanks are due to K. Sybesma (CPB), P. G. Hermans (CBS), J. Weitenberg (CPB), M. Edam and J. Griffiths (Law School, Groningen) for helpful comments and corrections and to E. Hoekstra for information retrieval and typing.