Marshall's Theory of Value and the Strong Law of Demand
9 Pages Posted: 29 Jun 2007
Date Written: July 2007
We show that all the fundamental properties of competitive equilibrium in Marshall's 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. This is, existence, uniqueness, optimality, global stability of equilibrium prices with respect to tantonnement price adjustment and refutability follow from the cyclical monotonicity of the market demand function in the Marshallian general equilibrium model.
Keywords: Partial equilibrium analysis, Short run equilibrium, Strong law of demand, Cyclical monotonicity, Legendre-Frenchel duality
JEL Classification: B13, C62, D11, D51
Suggested Citation: Suggested Citation