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Average Cost and Marginal Cost Pricing in Marshall: Textual Analysis and Interpretation

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  • zamparelli, luca

Abstract

This paper proposes a textual analysis of Marshall’s theory of firm pricing behavior under competitive conditions. It considers to what extent average cost and marginal cost pricing rules characterize Marshall’s competitive partial equilibrium, and it shows that the two rules differ for origins and can be reconciled only with great difficulty in a general equilibrium framework.

Suggested Citation

  • zamparelli, luca, 2007. "Average Cost and Marginal Cost Pricing in Marshall: Textual Analysis and Interpretation," MPRA Paper 6053, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6053
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    File URL: https://mpra.ub.uni-muenchen.de/6053/1/MPRA_paper_6053.pdf
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    References listed on IDEAS

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    1. Harris, Donald J, 1988. "On the Classical Theory of Competition," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 12(1), pages 139-167, March.
    2. Michel Quéré, 2003. "Increasing Returns and Competition: Learning from a Marshallian Perspective," Palgrave Macmillan Books, in: Richard Arena & Michel Quéré (ed.), The Economics of Alfred Marshall, chapter 10, pages 182-201, Palgrave Macmillan.
    3. P. Garegnani, 1970. "A Reply," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(3), pages 439-439.
    4. Ekelund, Robert B, Jr & Hebert, Robert F, 1999. "The Dupuit-Marshall Theory of Competitive Equilibrium," Economica, London School of Economics and Political Science, vol. 66(262), pages 225-240, May.
    5. P. Garegnani, 1970. "Heterogeneous Capital, the Production Function and the Theory of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(3), pages 407-436.
    6. Peter Newman, 1960. "The Erosion of Marshall's Theory of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 74(4), pages 587-600.
    7. Hart, Neil, 1996. "Marshall's Theory of Value: The Role of External Economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 20(3), pages 353-369, May.
    8. Ragnar Frisch, 1950. "Alfred Marshall's Theory of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(4), pages 495-524.
    9. Paul J. McNulty, 1967. "A Note on the History of Perfect Competition," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 395-395.
    10. Philip L. Williams, 1978. "The Emergence of the Theory of the Firm," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-03789-6.
    11. Mark Blaug, 1997. "Not Only an Economist," Books, Edward Elgar Publishing, number 1122.
    12. John K. Whitaker, 2003. "Alfred Marshall’s Principles and Industry and Trade: Two Books or One? Marshall and the Joint Stock Company," Palgrave Macmillan Books, in: Richard Arena & Michel Quéré (ed.), The Economics of Alfred Marshall, chapter 8, pages 137-157, Palgrave Macmillan.
    13. Joan Robinson, 1934. "What is Perfect Competition?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 49(1), pages 104-120.
    14. Paul J. McNulty, 1968. "Economic Theory and the Meaning of Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(4), pages 639-656.
    15. G. J. Stigler, 1972. "Perfect Competition, Historically Contemplated," Palgrave Macmillan Books, in: Charles K. Rowley (ed.), Readings in Industrial Economics, chapter 7, pages 105-130, Palgrave Macmillan.
    16. Peter Groenewegen, 2003. "Competition and Evolution: The Marshallian Conciliation Enterprise," Palgrave Macmillan Books, in: Richard Arena & Michel Quéré (ed.), The Economics of Alfred Marshall, chapter 7, pages 113-133, Palgrave Macmillan.
    17. Peter Groenewegen, 1995. "A SOARING EAGLE: Alfred Marshall 1842–1924," Books, Edward Elgar Publishing, number 193.
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    Cited by:

    1. Oggioni, Giorgia & Smeers, Yves, 2012. "Evaluating the application of different pricing regimes and low carbon investments in the European electricity market," Energy Economics, Elsevier, vol. 34(5), pages 1356-1369.

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    More about this item

    Keywords

    Marshall; classical competition; perfect competition; marginal and average cost;
    All these keywords.

    JEL classification:

    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)

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