Chapter 6: Cournot and the Social Income
Robert M. Solow Like any English-speaking economist, all I ever knew of Cournot is the 1897 English translation of The Mathematical Principles of the Theory of Wealth. More accurately, Cournot was always identified with his theory of duopoly, or more generally of markets with a small number of sellers, along with the alternative theories proposed later by Bertrand and von Stackelberg. There is a large literature on Cournot and the theory of oligopoly, and an enormous literature on the more general notion that came to be called the Cournot–Nash equilibrium in the theory of n-person non-cooperative games. This has never been a special interest of mine, so it would be foolish for me to pursue that central theme in a conference devoted to Cournot and his work. So I looked further. I had not actually reread the Mathematical Principles since my graduatestudent days 60 years ago. When I picked it up again, I was struck – even in translation – by the force and clarity of Cournot’s mind, and the natural modernity of the way he approached mathematical economics. Irving Fisher made the same observation in his 1898 review of the Bacon translation. I also noticed the existence of two chapters that were new to me, or that I had forgotten: Chapter 11, ‘Of the Social Income’, and Chapter 12, ‘Of Variations in the Social Income, Resulting from the Communication of Markets’ (by which Cournot means international or interregional trade). These chapters seem not to have been much discussed. They appear...
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