Euler's Theory

Discipline: Economics

Devised by Swiss mathematician Leonhard Euler (1707-1783), Euler's theory is a theory of distribution based on marginal productivity.

Euler showed that under constant returns to scale, if each factor of production is paid the value of its marginal product, total output (income) will be completely exhausted.

Also see: adding-up problem, marginal productivity theory of distribution, returns to scale

Source:
L C Young, Lectures on the Calculus of Variations and Optimal Control Theory (Philadelphia, 1969)

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