Article: Clarifying and Teaching Bohm-Bawerk's "Marginal Pairs".(19th-century economist Eugen von Bohm-Bawerk)(Statistical Data Included)

In history of economic thought courses, Eugen von Bohm-Bawerk (1851-1914) is usually introduced as one of the early Austrian economists who contributed to the theories of capital and interest. If time permits, however, key differences between the Austrian and neoclassical methods can easily be illustrated using Bohm-Bawerk's "marginal pairs" theory of price.(1) Bohm-Bawerk begins a horse trade with one potential buyer and one potential seller. He adds traders on one side of the market, then on the other, and finally proposes a general rule for the determinants of price. Because the valuations of the last successful buyer and seller(2) (one marginal pair) and of the first ...

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