There are scholars who note that this strict upbringing wielded strong influence on Marshall's work such as how he favored the doctrines of philosophical idealism.

Marshall founded the Cambridge School which paid special attention to increasing returns, the theory of the firm, and welfare economics; after his retirement leaderships passed to Arthur Cecil Pigou and John Maynard Keynes.

Marshall returned to Cambridge, via a brief period at Balliol College, Oxford, during 1883–84, to take the seat as Professor of Political Economy in 1884 on the death of Henry Fawcett.

Until that time, economics was taught under the Historical and Moral Sciences Triposes which failed to provide Marshall the kind of energetic and specialised students he desired.

Its main technical contribution was a masterful analysis of the issues of elasticity, consumer surplus, increasing and diminishing returns, short and long terms, and marginal utility.

Marshall pointed out that it is the prime or variable costs, which constantly recur, that influence the sale price most in this period.

This classification of costs into fixed and variable and the emphasis given to the element of time probably represent one of Marshall's chief contributions to economic theory.

Much of the success of Marshall's teaching and Principles book derived from his effective use of diagrams, which were soon emulated by other teachers worldwide.

Marshall's model allowed a visual representation of complex economic fundamentals where before all the ideas and theories were only capable of being explained through words.

He downplayed the contributions of certain other economists to his work, such as Léon Walras, Vilfredo Pareto and Jules Dupuit, and only grudgingly acknowledged the influence of Stanley Jevons himself.

Marshall was an important part of the "marginalist revolution"; the idea that consumers attempt to adjust consumption until marginal utility equals the price was another of his contributions.

Gary Becker (1930–2014), the 1992 Nobel prize winner in economics, has mentioned that Milton Friedman and Alfred Marshall were the two greatest influences on his work.

[17] A concept based on a pattern of organisation that was common in late nineteenth-century Britain in which firms concentrating on the manufacture of certain products were geographically clustered.

The two dominant characteristics of a Marshallian industrial district[19] are high degrees of vertical and horizontal specialisation and a very heavy reliance on market mechanism for exchange.

They illustrate competitive capitalism at its most efficient, with transaction costs reduced to a practical minimum, but they are feasible only when economies of scale are limited.

The outbreak of the First World War in 1914 prompted him to revise his examinations of the international economy and in 1919 he published Industry and Trade at the age of 77.

He had shied away from controversy during his life in a way that previous leaders of the profession had not, although his even-handedness drew great respect and even reverence from fellow economists, and his home at Balliol Croft in Cambridge had no shortage of distinguished guests.

His students at Cambridge became leading figures in economics, including John Maynard Keynes and Arthur Cecil Pigou.

His most important legacy was creating a respected, academic, scientifically founded profession for economists in the future that set the tone of the field for the remainder of the 20th century.

[21] Keynes wrote an obituary for his former tutor which Joseph Schumpeter called "the most brilliant life of a man of science I have ever read".

[24] His home, Balliol Croft, was renamed Marshall House in 1991 in his honour when it was bought by Lucy Cavendish College, Cambridge.

[25] Alfred Marshall's wife was Mary Paley, an economist who was one of the first women students at Cambridge and a lecturer at Newnham College.