Alfred Marshall’s cardinal theory of value: the strong law of demand

Donald J. Brown () and Caterina Calsamiglia
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Donald J. Brown: Yale University

Economic Theory Bulletin, 2014, vol. 2, issue 1, No 7, 65-76

Abstract: 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. We propose a refutable model of Marshall’s cardinal theory of value: the Marshallian equilibrium inequalities. We show that the Marshallian equilibrium inequalities have a solution iff the finite market data set consisting of observations on market prices and social endowments is cyclically monotone.

Keywords: Cardinal utility; Quasilinear utility; Cyclical monotonicity (search for similar items in EconPapers)
JEL-codes: B13 D11 D51 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: Alfred Marshall's Cardinal Theory of Value: The Strong Law of Demand (2013)
Working Paper: Alfred Marshall's Cardinal Theory of Value: The Strong Law of Demand (2013)
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DOI: 10.1007/s40505-014-0029-5

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