Abstract
The envelope theorem appeared in economics following the 1931 Viner–Wong diagram (incorrectly drawn in the original paper). This famous paper indicated that, starting at some minimum cost input combination, the change of average cost when output changed was the same whether or not other inputs were allowed to vary or were held fixed. This puzzling result remained mostly a curiosity until the 1970s when, with the use of a generalization of this diagram, the modern theory of duality was developed. This new approach to comparative statics provided a clearer explanation for the appearance of refutable implications in maximization models.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Samuelson, P.A. 1947. Foundations of economic analysis. Cambridge, MA: Harvard University Press.
Silberberg, E., and W. Suen. 2000. The structure of economics. 3rd ed. New York: McGraw-Hill.
Viner, J. 1931. Cost curves and supply curves. Zeitschrift für Nationalökonomie 3, 23–46. Repr. in American Economic Association. 1952. Readings in price theory. Homewood: Irwin.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Silberberg, E. (2018). Envelope Theorem. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_155
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_155
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences