One of the fundamental components of modern economic theory, first examined by French economist ANNE-ROBERT JACQUES TURGOT (1727-1781), distribution theory is an explanation of how national income is distributed between different groups involved in the production process.
Functional distribution of income is that earned by the owners of the various factors of production.
The income earned by individual factors is determined by the demand and supply for them. Distribution theory (which also examines the stage at which goods and services reach consumers) was developed subsequently by Scottish economist Adam Smith (1723-1790), English economist David Ricardo (1772-1823), German political economist Karl Marx (1818-1883) and others.
A J Turgot, Reflections sur la formation et la distribution des richesses (Paris, 1766)