Alfred Marshall's Cardinal Theory of Value: The Strong Law of Demand
Yale University - Cowles Foundation
Universitat Autònoma de Barcelona
July 29, 2013
Cowles Foundation Discussion Paper No. 1615R
We show that all the fundamental properties of competitive equilibrium in Marshall's cardinal theory of value, as presented in Note XXI of the mathematical appendix to his Principles of Economics (1890), derive from the Strong Law of Demand. That is, existence, uniqueness, optimality, and global stability of equilibrium prices with respect to tatonnement price adjustment follow from the cyclical monotonicity of the market demand function in the Marshallian general equilibrium model.
Number of Pages in PDF File: 8
Keywords: Cardinal utility, Quasilinear utility, Cyclical monotonicity
JEL Classification: B13, D11, D51
Date posted: July 30, 2013
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