Returns to Scale and Marshallian Economics

Abstract

His [Marshall’s] analysis of the Laws of Return brought order and meaning to the theories of Smith, Ricardo and Marx. But his reconciliation of decreasing cost and competitive equilibrium via the notions of external economies, monopolistic competition, and the representative firm,...., raised false problems that took the best efforts of a generation of economists to solve. (Blaug, 1962, p.399).

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Notes on contributors

Neil Hart

School of Business and Technology, University of Western Sydney, Macarthur, P.O. Box 555, Campbelltown, NSW 2560. The material for this article comes primarily from Chapters 2 and 3 of Neil Hart’s Master of Economics Thesis, entitled “Economic Theory and Returns to Scale: A Study of Controversies in Marshallian Economics”, submitted to the University of Sydney, May 1989. He would like to gratefully acknowledge the assistance provided by his supervisor, Peter Groenewegen, and the comments of Tony Aspromourgos and Peter Kriesler. The Thesis was awarded the 1991 HETSA Essay Prize.