CFDP 1615R

Alfred Marshall's Cardinal Theory of Value: The Strong Law of Demand

Author(s): 

Publication Date: July 2007

Revision Date: July 2013

Pages: 7

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.

Keywords: 

Cardinal utility, Quasilinear utility, Cyclical monotonicity

JEL Classification Codes:  B13, D11, D51

See CFP: 1418