ETD

• cost theory
• economic value theories
• increasing costs
• Marshall
• Sraffa
• supply curves

In this dissertation I review Piero Sraffa’s 1925 critique of partial equilibrium analysis focusing on the problems of coordination between rising supply curves and partial equilibrium method. The debates between Paul Samuelson and some Sraffians are also considered. It is shown how Samuelson’s identified conditions for a proper application of the theory are the same as those of Sraffa and how the assumptions required are stronger than the ones contemplated in the 1925 critique. The main block of the thesis is devoted to the analysis of partial equilibrium models found in modern textbooks from the perspective of Sraffa’s article. It is shown how, when a whole economy is modelled, such that partial equilibrium holds, the conditions for a proper application of partial equilibrium identified by Sraffa are fulfilled. Moreover, in the cases they do not hold, partial equilibrium cannot be used to determine prices. In the long-run, when firm’s entrance is allowed, industry supply is characterized by a special form of constant returns. Those are the kind of returns compatible with the theory and considered by Sraffa to be the most relevant.