marginal productivity theory of distribution

Discipline: Economics

First formulated by American economist John Bates Clark (1847-1938), marginal productivity theory of distribution shows how capital or labor will be sought until the marginal revenue from employing either is equal to its marginal cost.

Marginal productivity theory of distribution deals principally with demand for factors of production and disregards the supply side.

Source:
J B Clark, The Distribution of Wealth: A Theory of Wages, Interest and Profits (New York, 1899)

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