Abstract
The idea that the demand for intermediate goods is derived from the demand for the final goods they help produce is obvious and appealing. It was implied by Cournot (1838, pp. 99–116) and explicitly stated by Gossen (1854, pp. 31, 113) and Menger (1871, pp. 63–7). That the British classical school failed to make use of such a perspective – Mill’s famous proposition that ‘demand for commodities is not demand for labour’ (1848, Book I, ch. 5) came close to denying it – was doubtless due to the strong emphasis placed on prior accumulation of capital as a prerequisite for production. But it was Alfred Marshall in his Principles of Economics (1890, pp. 381–93, 852–6) who introduced the term ‘derived demand’ and developed the concepts of the derived demand curve for an input and the elasticity of derived demand.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Cournot, A.A. 1838. Mathematical principles of the theory of wealth. Trans., New York: Macmillan, 1897.
Diewert, W.E. 1971. A note on the elasticity of derived demand in the n-factor case. Economica 38: 192–198.
Gossen, H.H. 1854. The laws of human relations. Trans., Cambridge, MA: MIT Press, 1983.
Henderson, D.H. 1922. Supply and demand. London: Nisbet.
Hicks, J.R. 1932. The theory of wages. London: Macmillan.
Marshall, A. 1890. Principles of economics, vol. 1, 8th ed. London: Macmillan, 1920.
Maurice, S.C. 1975. On the importance of being unimportant: An analysis of the paradox in Marshall’s third rule of derived demand. Economica 42: 385–393.
Menger, C. 1871. Principles of economics. Trans., New York: New York University Press, 1981.
Mill, J.S. 1848. Principles of political economy. London: Parker.
Robinson, J. 1933. The economics of imperfect competition. London: Macmillan.
Wisecarver, D. 1974. The social costs of input-market distortions. American Economic Review 64: 359–372.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Whitaker, J.K. (2018). Derived Demand. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_97
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_97
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