Some Reflections

The period from 1776 to the death of Marshall witnessed successive elaborations on the equilibrium and stability model presented in The Wealth of Nations. The model proposes an equilibrium in which price would equal unit costs plus the opportunity cost of capital. At such an equilibrium all firms would be earning similar rates of return on capital after allowance is made for differences in riskiness and agreeability. Impediments to the achievement of this equilibrium are labelled as monopolistic restrictions.