Alfred Marshall has been wrongly accused by many modern economic theorists that he forgot to take producers' surplus into consideration in Figure 31 in his
Principles (Marshall, 1890, 1961, p.468, Ellis and Fellner, 1943, Samuelson, 1967), where he proposed the tax and bounty plan. Elsewhere we defended Marshall that Figure 31 can be interpreted as the case of no producers' surplus, in view of his distinction between the supply curve and the particular expenses curve. In other words, Marshall did not forget to consider producers' surplus, but merely considered the case of no producers' surplus (Negishi, 1999).
View full abstract