Entrepreneurship, knowledge and employment

What is Supply-and-Demand? Rationalizing the Marshallian Cross, 1838-1890

Aspromourgos Tony, University of Sydney

This study takes its bearings from the proposition that the supply-and-demand apparatus of the ‘Marshallian cross’ is an unsatisfactory and implausible representation of actual supply and demand forces, which are better characterized in the manner of the classical economists. From that point of departure it then enquires into how and why that representation nevertheless arose in the period from 1838 to 1890, notwithstanding its lack of robustness as economic theory – via consideration of the economics of four key contributors prior to Marshall. The investigation confirms that there is no plausible basis for a general presumption in favour of the conventional rising supply function – other than the marginal productivity theory of factor pricing, which is itself unsatisfactory. There are multiple reasons for the rise of the apparatus of supply-and-demand functions, notwithstanding its intrinsic implausibility.

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Keywords: rising supply-price, Cournot, Dupuit, Mangoldt, Jenkin

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