Alfred Marshall's Cardinal Theory of Value: The Strong Law of Demand

8 Pages Posted: 30 Jul 2013  

Donald Brown

Yale University - Cowles Foundation

Caterina Calsamiglia

Universitat Autònoma de Barcelona

Date Written: July 29, 2013

Abstract

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

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

Donald J. Brown (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Caterina Calsamiglia

Universitat Autònoma de Barcelona ( email )

Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

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