Marshall and Offer Curve

Abstract

The marginal revolution against the classical economics is often attributed to S. Jevons, C. Menger and L. Walras, who published their works in 1870’s. From the point of view of international trade theory, however, we may also add the name of A. Marshall,¹ though his Principles of Economics was published in 1890. As a matter of fact, his early tracts on The pure theory of foreign trade and The pure theory of domestic value are both dated 1879. Marshall reworked some of the theories of J. S. Mill into rigorous diagrams, which includes, among others, those of Marshallian offer curves to study the equilibrium terms of trade in a two commodity two country model. Marshall introduced the graphic apparatus of offer curves, though he did not show how they are derived from the underlying demand and production. It was left for later day’s economists, for example, Meade [1952], who skillfully derived offer curves by the use of trade indifference curves.