The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Marginal Productivity Theory

  • R. Dorfman
Reference work entry


Marginal productivity theory is an approach to explaining the rewards received by the various factors or resources that cooperate in production. Broadly stated, it holds that the wage or other payment for the services of a unit of a factor is equal to the decrease in the value of commodities produced that would result if any unit of that factor were withdrawn from the productive process, the amounts of all other factors remaining the same.

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  1. Expositions of marginal productivity theory can be found in any standard text on microeconomics, for example Mansfield (1985). A famous and thoughtful presentation is contained in Hicks (1932). More advanced, and more mathematical, treatments, can be found in Baumol (1977) and Malinvaud (1972). For the relation between marginal productivity and mathematical programming, see Dorfman et al. (1958). The standard, and excellent, reference on the history of the doctrine is Stigler (1941).Google Scholar
  2. Baumol, W.J. 1977. Economic theory and operations analysis. Englewood Cliffs: Prentice-Hall.Google Scholar
  3. Dorfman, R., P.A. Samuelson, and R.M. Solow. 1958. Linear programming and economic analysis. New York: McGraw-Hill.Google Scholar
  4. Hicks, J.R. 1932. The theory of wages. New York: Macmillan.Google Scholar
  5. Malinvaud, E. 1972. Lectures on microeconomic theory. Amsterdam: North-Holland.Google Scholar
  6. Mansfield, E. 1985. Microeconomics: Theory and applications. New York: Norton.Google Scholar
  7. Stigler, G.J. 1941. Production and distribution theories: The formative period. New York: Macmillan.Google Scholar

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • R. Dorfman
    • 1
  1. 1.