Average cost and marginal cost pricing in Marshall: Textual analysis and interpretation

Luca Zamparelli

The European Journal of the History of Economic Thought, 2009, vol. 16, issue 4, 665-694

Abstract: This paper proposes a textual analysis of Marshall's theory of firm pricing behavior under competitive conditions. Average cost and marginal cost pricing theories have very distinct origins as they are rooted, respectively, in the classical and marginalistic theory of competition. I analyze to what extent and under which circumstances the two theories joined in the work of Alfred Marshall; and I argue that, even though only partial evidence can be found to support the adoption of the notion of marginal cost pricing by Marshall, he developed some concepts, such as the distinction between short and long periods and the notion of quasi-rents, which turned out to be fundamental for the joint acceptance of marginal cost and average cost pricing principles by the Marshallian school.

Keywords: Marshall; classical competition; perfect competition; marginal and average cost (search for similar items in EconPapers)
Date: 2009
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Working Paper: Average Cost and Marginal Cost Pricing in Marshall: Textual Analysis and Interpretation (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:eujhet:v:16:y:2009:i:4:p:665-694

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DOI: 10.1080/09672560903201276

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