Ewerhart, Christian (2003). A short and intuitive proof of Marshall's rule. Economic Theory, 22(2):415-418.
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.
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.
| Item Type: | Journal Article, refereed, original work |
|---|---|
| Communities & Collections: | 03 Faculty of Economics > Department of Economics |
| Dewey Decimal Classification: | 330 Economics |
| Scopus Subject Areas: | Social Sciences & Humanities > Economics and Econometrics |
| Language: | English |
| Date: | 2003 |
| Deposited On: | 06 Apr 2010 11:20 |
| Last Modified: | 14 Sep 2022 13:24 |
| Publisher: | Springer |
| ISSN: | 0938-2259 |
| OA Status: | Green |
| Publisher DOI: | https://doi.org/10.1007/s00199-002-0291-x |
Ewerhart, Christian