ABSTRACT
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SRAFFA (1925) criticized the analysis of variable cost industries within the Marshallian framework of partial equilibrium. The main issue consists in the following: with a change in the quantity produced by a variable cost industry it cannot be excluded that this change at the same time entails a change in the costs of firms in other industries as it entails a change in the costs of firms in the industry in which the change in the quantity produced took place. The changes in costs would be of the same order of magnitude, so that it would be illegitimate to disregard the changes in the cost functions of firms outside the industry in which the quantity produced has changed, while taking into account the changes obtained in the cost functions of firms inside the industry only in which the variation in quantity took place. Hence the Marshallian partial equilibrium analysis can manage variable costs only when the (dis)economies responsible for variable costs are external to the firm and internal to the industry.
