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A short and intuitive proof of Marshall's Rule

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  • Christian Ewerhart

Abstract

When the price of an input factor to a production process increases, then the optimal output level declines and the input is substituted by other factors. Marshall's rule is a formula that determines the own-price elasticity for one factor as a weighted sum of the elasticities of output market demand and factor substitution. This note offers a proof for Marshall's rule that is significantly shorter and somewhat more intuitive than existing derivations. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Christian Ewerhart, 2003. "A short and intuitive proof of Marshall's Rule," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 415-418, September.
  • Handle: RePEc:spr:joecth:v:22:y:2003:i:2:p:415-418
    DOI: 10.1007/s00199-002-0291-x
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    Cited by:

    1. Christian Ewerhart, 2015. "Contest success functions: the common-pool perspective," ECON - Working Papers 195, Department of Economics - University of Zurich.
    2. George Borjas, 2013. "The analytics of the wage effect of immigration," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-25, December.

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