Three outstanding NOeG presentations: Morgenstern, Viner, and Menger on the laws of costs and returns

This paper re-examines three outstanding contributions on the laws of costs and returns that were first presented at NOeG meetings in the interwar period. Oskar Morgenstern, in a paper presented in January 1930, provided a lucid account of the unresolved problems in the Marshallian approach to the construction of long-run industry supply curves. A few months later, Jacob Viner presented his classic paper on "Cost curves and supply curves". Viner's contribution, with its rigorous geometrical derivation of industry supply curves from the firms' cost situations in competitive conditions, became the model for innumerable textbook presentations of these issues, and a springboard for many further contributions. In another brilliant paper, first presented at a NOeG meeting in December 1935, Karl Menger severely criticised the axiomatic acceptance of the law of diminishing returns. Menger showed that the existing a-priori "proofs" of this law are invalid, and made a strong plea for empirical verification. The present paper re-examines the three contributions, discusses their importance for the further development of partial equilibrium analysis, and suggests some reasons for their continuing relevance for present-day microeconomics.