Study on Marshall´s thought of increasing returns

In the works of Alfred Marshall, there consists the legacy of increasing returns. In some sense, the New Growth theory which rises from the 1980s could be regarded as partly but not wholly revival of Marshall´s increasing returns thoughts. This paper explains Marshall´s ideas of increasing returns from the perspective of text-interpretation. The interesting finding is the close relations both between internal economies and differentiation of organization, and between external economies and integration of organization. What´s more, the relationship between increasing returns and the partial equilibrium method is closely examined.