8 Pages Posted: 30 Jul 2013
Date Written: July 29, 2013
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.
Keywords: Cardinal utility, Quasilinear utility, Cyclical monotonicity
JEL Classification: B13, D11, D51
Suggested Citation: Suggested Citation
Brown, Donald and Calsamiglia, Caterina, Alfred Marshall's Cardinal Theory of Value: The Strong Law of Demand (July 29, 2013). Cowles Foundation Discussion Paper No. 1615R. Available at SSRN: https://ssrn.com/abstract=2302613 or http://dx.doi.org/10.2139/ssrn.2302613