Consumers' Surplus in International Trade: Marshall's Example.

In Money, Credit and Commerce, Alfred Marshall gave a numerical example of two countries' trading schedules in which he stated the net benefit of trade to each country. Allyn Young, along with Taussig and Loria, suggested that Marshall had made a "perplexing slip." This paper contradicts Young's arguments and produces a very close approximation to Marshall's results by fitting a smooth curve to his schedules. Further analysis shows that Marshall's offer curves are approximately cubic, which is consistent with demand curves in which the relative price is written as a quadratic function of quantity demanded. Copyright 1991 by Blackwell Publishers Ltd and The Victoria University of Manchester