A short and intuitive proof of Marshall's Rule

Christian Ewerhart

Economic Theory, 2003, vol. 22, issue 2, 415-418

Abstract: When the price of an input factor to a production process increases, then the optimal output level declines and the input is substituted by other factors. Marshall's rule is a formula that determines the own-price elasticity for one factor as a weighted sum of the elasticities of output market demand and factor substitution. This note offers a proof for Marshall's rule that is significantly shorter and somewhat more intuitive than existing derivations. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Keywords and Phrases:Production theory; Factor demand; Elasticity of substitution.; JEL Classification Numbers:D24. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00199-002-0291-x

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