Higgling of the market is described by Adam Smith as a process by which ‘exchangeable value’ is adjusted to its measure ‘quantity of labour’:

It is often difficult to ascertain the proportion between two different quantities of labour … it is not easy to find any accurate measure either of hardship or ingenuity. In exchanging, indeed, the different productions of different sorts of labour for one another, some allowance is commonly made for both. It is adjusted, however, not by any accurate measure, but by the higgling and bargaining of the market, according to that rough equality which, though not exact, is sufficient for carrying on the business of common life (Wealth of Nations, bk. i, ch. v).

Compare Fleeming Jenkin:

The higgling of the market, ascertaining the result of the relative demand and supply in that market, does not in the long run determine the price of either eggs or tea; it simply finds out the price which had been already determined by quite different means (‘Time-Labour System’, Papers, Literary, Scientific, etc., p. 139).

It is possible to accept the writer’s account of the market process (ibid. p. 123) without contrasting so strongly the determination of price by demand and supply and by cost of production (cf. Marshall’s Principles, Preface to 1st edn, p. xi.). Prof. Marshall at the beginning, when treating of the theory of the equilibrium of demand and supply, gives an excellent type of the action of a market (ibid, 5th edn, bk. v, ch. ii, § 2). The subject can hardly be apprehended without mathematical conceptions. Thus Mill, in his description of the play of demand and supply (Political Economy, bk. iii, ch. ii, § 4), in the absence of the idea of a demand-curve or function, may seem to use the phrases ‘demand increases’, ‘demand diminishes’, loosely. A more distinct idea is thus expressed by Fleeming Jenkin in his Graphic Representations: ‘If every man were openly to write down beforehand exactly what he would sell or buy at each price, the market price might be computed immediately.’ A similar idea is presented by Prof. Walras (Éléments d’économie pure, article 50). In some later passages he has formulated the higgling of the market more elaborately. The present writer, criticizing these passages (Revue d’économie politique, January 1891), has maintained that even if the dispositions of all the parties were known beforehand, there could be predicted only the position of equilibrium, not the particular course by which it is reached. Of course special observation may supply the defects of theory. For instance there may be evidence of the incident which Cantillon attributes to the ‘altercation’ of a market, namely the predominant influence of a few buyers or sellers; ‘le prix réglé par quelques uns est ordinairement suivi par les autres’ (Essai, part ii, ch. ii. Des prix des marchés). Compare Condillac:

‘Aussitôt que quelues uns seront d’accord sur la proportion à suivre dans leurs échanges les autres prendront cette proportion pour règle’ (Le Commerce et le Gouvernement, ch. iv: Des marchés).

‘Higgling’ is not always qualified as ‘of a market’. The term may be used in much the same sense as the ‘art of bargaining’ is used by Jevons, with reference to a transaction between two individuals, in the absence of competition (Theory, p. 124, 3rd edn). Thus Professor Marshall, in an important passage relating to the case in which agents of production are held by two monopolists, says that there is ‘nothing but “higgling and bargaining”’ to settle the proportions in which a certain surplus will be divided between the two (Principles of Economics, bk. v, ch. xi). Moses, in the Vicar of Wakefield, did not require a fair for the exercise of the skill which is thus attributed to him: ‘He always stands out and higgles and actually tires them till he gets a bargain.’