IDEAS home Printed from https://ideas.repec.org/a/taf/eujhet/v16y2009i4p665-694.html
   My bibliography  Save this article

Average cost and marginal cost pricing in Marshall: Textual analysis and interpretation

Author

Listed:
  • Luca Zamparelli

Abstract

This paper proposes a textual analysis of Marshall's theory of firm pricing behavior under competitive conditions. Average cost and marginal cost pricing theories have very distinct origins as they are rooted, respectively, in the classical and marginalistic theory of competition. I analyze to what extent and under which circumstances the two theories joined in the work of Alfred Marshall; and I argue that, even though only partial evidence can be found to support the adoption of the notion of marginal cost pricing by Marshall, he developed some concepts, such as the distinction between short and long periods and the notion of quasi-rents, which turned out to be fundamental for the joint acceptance of marginal cost and average cost pricing principles by the Marshallian school.

Suggested Citation

  • Luca Zamparelli, 2009. "Average cost and marginal cost pricing in Marshall: Textual analysis and interpretation," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 16(4), pages 665-694.
    • Handle: RePEc:taf:eujhet:v:16:y:2009:i:4:p:665-694
    DOI: 10.1080/09672560903201276
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/09672560903201276
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09672560903201276?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Octavian-Dragomir Jora & Gheorghe Hurduzeu & Mihaela Iacob & Georgiana-Camelia Cre?an, 2017. "“Dialectical Contradictions” in the Neoclassical Theory and Policy Regarding Market Competition: The Consumer and His Continuos Burden of Crisis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(45), pages 544-544, May.
    2. Lefteris Tsoulfidis, 2015. "Contending Conceptions of Competition and the Role of Regulating Capital," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 15-31, March.
    3. M. S. Addleson, 1984. "General Equilibrium and ‘Competition’: On Competition as Strategy," South African Journal of Economics, Economic Society of South Africa, vol. 52(2), pages 104-113, June.
    4. Joan-Severo Chumbita, 2020. "Alfred Marshall, autor del siglo XX: desempleo involuntario, monopolio, amortización acelerada, competencia por nuevos productos e intervención estatal orientada a alcanzar el producto máximo," Ensayos de Economía 19130, Universidad Nacional de Colombia Sede Medellín.
    5. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
    6. Neri Salvadori & Rodolfo Signorino, 2013. "The Classical Notion of Competition Revisited," History of Political Economy, Duke University Press, vol. 45(1), pages 149-175, Spring.
    7. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 87-108, March.
    8. Duccio Cavalieri, 2009. "Sull'inseparabilit? delle strutture sintattiche nell'analisi classica del valore e della distribuzione," STUDI ECONOMICI, FrancoAngeli Editore, vol. 0(97), pages 5-46.
    9. Menudo, Jose M., 2011. "Market Stability in Adam Smith: Competitive Process and Institutions," MPRA Paper 15361, University Library of Munich, Germany.
    10. Giulio Guarini & Vasco Molini & Roberta Rabellotti, 2006. "Is Korea Catching Up? An Analysis of the Labour Productivity Growth in South Korea," Oxford Development Studies, Taylor & Francis Journals, vol. 34(3), pages 323-339.
    11. Richard E. Wagner, 2015. "Welfare Economics and Second-Best Theory: Filling Imaginary Economic Boxes," Cato Journal, Cato Journal, Cato Institute, vol. 35(1), pages 133-146, Winter.
    12. Schefold, Bertram, 2008. "C.E.S. production functions in the light of the Cambridge critique," Journal of Macroeconomics, Elsevier, vol. 30(2), pages 783-797, June.
    13. Stirati, Antonella, 2014. "Real wages in the business cycle: an unresolved conflict between theory and facts in mainstream macroeconomics," MPRA Paper 53743, University Library of Munich, Germany.
    14. Doan, Tinh & Stevens, Philip, 2012. "Evolution of competition in Vietnam industries over the recent economic transition," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-24.
    15. Ruyun (Ivy) Feng & Michael D. Kimbrough & Sijing Wei, 2022. "The role of information transparency in the product market: an examination of the sustainability of profitability differences," Review of Accounting Studies, Springer, vol. 27(2), pages 668-705, June.
    16. Alessandro Roncaglia, 2013. "Luigi Spaventa," PSL Quarterly Review, Economia civile, vol. 66(266), pages 171-199.
    17. Mariolis, Theodore, 2015. "Testing Bienenfeld’s Second-Order Approximation for the Wage-Profit Curve," MPRA Paper 68215, University Library of Munich, Germany.
    18. Alfarano, Simone & Milaković, Mishael & Irle, Albrecht & Kauschke, Jonas, 2012. "A statistical equilibrium model of competitive firms," Journal of Economic Dynamics and Control, Elsevier, vol. 36(1), pages 136-149.
    19. Saverio M. Fratini, 2009. "Reswitching and Decreasing Demand for Capital in a Model with a Continuum of Linear Techniques," EERI Research Paper Series EERI_RP_2009_26, Economics and Econometrics Research Institute (EERI), Brussels.
    20. Theodore Mariolis & Lefteris Tsoulfidis, 2016. "Capital theory ‘paradoxes’ and paradoxical results: resolved or continued?," Evolutionary and Institutional Economics Review, Springer, vol. 13(2), pages 297-322, December.

    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)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:eujhet:v:16:y:2009:i:4:p:665-694. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/REJH20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.