Diminishing Returns

Principle that adding more of one input to fixed others eventually raises output by smaller increments.

Specifications & Metrics

type

Microeconomics

introduced

1767

originator

Anne Robert Jacques Turgot

Core Principles & Analysis

• Turgot stated it for agriculture in 1767; Ricardo and Malthus made it central to classical economics.
• It gives the classic U-shaped average cost curve its rising right-hand side.
• Its absence, constant or increasing returns, is what makes software and platform economics distinctive.

Sources

• Wikipedia: Diminishing returns