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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

    as
    1. Harris, Donald J, 1988. "On the Classical Theory of Competition," Cambridge Journal of Economics, Oxford University Press, vol. 12(1), pages 139-167, March.
    2. P. Garegnani, 1970. "A Reply," Review of Economic Studies, Oxford University Press, vol. 37(3), pages 439-439.
    3. 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.
    4. P. Garegnani, 1970. "Heterogeneous Capital, the Production Function and the Theory of Distribution," Review of Economic Studies, Oxford University Press, vol. 37(3), pages 407-436.
    5. Hart, Neil, 1996. "Marshall's Theory of Value: The Role of External Economies," Cambridge Journal of Economics, Oxford University Press, vol. 20(3), pages 353-369, May.
    6. Ragnar Frisch, 1950. "Alfred Marshall's Theory of Value," The Quarterly Journal of Economics, Oxford University Press, vol. 64(4), pages 495-524.
    7. Paul J. McNulty, 1967. "A Note on the History of Perfect Competition," Journal of Political Economy, University of Chicago Press, vol. 75, pages 395-395.
    8. George J. Stigler, 1957. "Perfect Competition, Historically Contemplated," Journal of Political Economy, University of Chicago Press, vol. 65, pages 1-1.
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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.

    More about this item

    Keywords

    Marshall; classical competition; perfect competition; marginal and average cost;

    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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