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1、Chapter 8 THE MARGINALIST SCHOOL THE MARGINALIST SCHOOL FORERUNNERSFORERUNNERS IntroductionIntroduction The beginning of the marginalist school is dated at 1871 the year Jevons and Menger published their influential books on marginal utility theory These forerunners were Antoine Cournot and Jules Du
2、puit in France and Johann von Thu nen in Germany In this chapter we will develop an overview of the marginalist school and discuss the ideas of these three forerunners The Historical Background of the Marginalist School The trend of the nineteenth century in Europe was to develop three approaches of
3、 attack on pressing social problems and all three flouted classical economic precepts These approaches were to promote socialism to bolster trade unionism or to demand government action to ameliorate conditions by regulating the economy eliminating abuses and redistributing income 8 1 OVERVIEW OF TH
4、E MARGINALIST SCHOOL Guided by win win concept The marginalists opposed all three solutions The marginalists defended market allocation and distribution deplored government intervention denounced socialism and sought to discourage labor unionism as either ineffective or pernicious Major Tenets of th
5、e Marginalist School The basic ideas of the marginalist school are listed 1 Focus on the margin 2 Rational economic behavior 3 Microeconomic emphasis 4 The use of the abstract deductive method 5 The pure competition emphasis 6 Demand oriented price theory 7 Emphasis on subjective utility 8 Equilibri
6、um approach 9 Merger of land with capital goods 10 Minimal government involvement Whom Did the Marginalists Benefit or Seek to Benefit The marginalists sought to advance the interest of all of humankind through promoting a better understanding of how a market system efficiently allocates resources a
7、nd promotes economic liberty marginalism the economics of liberalism or political conservatism also benefited those whose interests were simply in maintaining the status quo that is those who resisted change How Was the Marginalist School Valid Useful or Correct in Its Time The marginalist school de
8、veloped new and powerful tools of analysis especially geometric diagrams and mathematical techniques The method of partial equilibrium analysis championed of this school was useful for abstracting from the complexity of the real world This approach allowing one variable at a time to change while hol
9、ding all other variables temporarily constant enabled the investigators to dissect complex phenomena one step at a time Which Tenets of the Marginalist School Became Lasting Contributions Many of the marginalist theories remained relatively unscathed as attested to by the fact that they can be found
10、 in contemporary textbooks on principles of economics and microeconomics The school eventually was absorbed by the broader neoclassical school which together with variations of Keynesian macroeconomics dominates economic analysis in Western counties and shares the international field with socialism
11、8 2 ANTOINE AUGUSTIN COURNOT 1801 1877 He was the first economist to apply mathematics to economic analysis He was the first economist to develop concise mathematical models of pure monopoly duopoly and pure competition Cournot is considered to be a forerunner to the marginalist school because much
12、of his analysis focused on the rates of change of total cost and revenue functions Such rates of change the mathematical derivatives translate to what econ omists now refer to as marginal cost and marginal revenue Cournot s Theory of Monopoly Cournot is credited with being the first economist to der
13、ive the now familiar proposition that a firm can maximize its profits by setting a price at which marginal revenue equals marginal cost Cournot s Theory of Monopoly Suppose that a man finds himself proprietor of a mineral spring which has just been found to possess salutary properties possessed by n
14、o other He could doubtless fix the price of a liter of this water at 100 francs but he would soon see by the scant demand quantity demanded that this is not the way to make the most of his property He will therefore successively reduce the price of the liter to the point which will have him the grea
15、test possible profit i e if F p denotes the law of demand quantity demanded he will end after various trials by adopting the value of p price which renders the product pF p total revenue a maximum Cournot s Theory of Monopoly Here Cournot is assuming that the total cost and therefore the marginal co
16、st of obtaining the mineral water is zero Because this is the case total profits will be maximized at that quantity of output where total revenue price quantity is the greatest Cournot s Theory of Duopoly Cournot s theory of duopoly a market in which two firms compete was the first formal attempt by an economist to analyze the conduct and performance of sellers in an oligopolistic market structure In formulating his theory of duopoly Cournot assumed that buyers name the prices and that the two s
