The life of Antoine Augustin
Cournot was testimony to Andrew Carnegie's assertion, “It does not pay to
pioneer.” This genius of economics and philosophy was born into a family of
French farmers who had tilled the same land for almost 300 years. His life
was marred by tragedy and marked by anonymity. Most of his working life was
spent as a school superintendent, and even that job was secured only through
the influence of his friend Siméon Denis Poisson, the famous French physicist
and statistician. The significance of his work was recognized only long after
his death. Today,
Cournot is remembered best in his homeland as a philosopher; in the
English-speaking world he is hailed as a brilliant pioneer in economics.
Working largely in isolation early in the nineteenth century, Cournot examined
the conventional economic wisdom of his day through the microscope of
differential calculus. And what a rich lode of insights this examination
exposed! Among other pathbreaking
contributions, Cournot (a) formally introduced demand and supply
curves, (b) differentiated between changes in demand or supply and
changes in the quantities demanded or supplied, (c) mathematically
derived the marginal revenue equals marginal cost rule for profit
maximization, and (d) specified equilibrium conditions for monopolists,
interdependent oligopolists, and firms operating under pure competition. In
short, his insights provided the basic tools required for much of modern
microeconomic theory. Unfortunately, however, these tools remained locked in
the toolbox for decades because few economists understood how to use them,
and even those who might have were seldom exposed to his work. Only his first
and most influential book [1838], which fairly bristles with originality, was
translated into English. Cournot’s
analysis of monopolistic profit maximization contains the kernel of his
theory of the firm. As an example, he considered a monopolist who could
costlessly supply water from a mineral spring with uniquely healthful
qualities. Cournot
demonstrated that this is accomplished when marginal revenue (derived from
the demand curve) equals marginal cost (MR = MC). Cournot's procedure is now
commonplace, but before 1838 there was no formal theory of profit
maximization. Virtually every fundamental axiom in the economic theory of the
firm stems from Cournot's trailblazing analysis. Cournot's
demeanor was solitary and melancholy, traits that influenced his writing. His
austere books abound with facts and rigorous mathematical proofs. He
confessed to a fellow French economist that he was unpopular with his
publishers because none of his books sold enough to be profitable until years
after their publication. Unfortunately, his most productive years were
absorbed by his duties as a school administrator. Recognition
of the profundity of Cournot's work was obstructed by his contemporaries'
discomfort with mathematics, a problem made worse because gradual
deterioration of his eyesight impaired the accuracy of his mathematical
notation. For their part, prejudice and shortsightedness blinded other
economists to his advances in theory, which remained largely unappreciated
until more than two decades after his death. Today,
however, Cournot's contributions are heralded as precursors for mathematical
game theory, which many economists view as the most promising approach now
available for describing strategic interaction, whether between firms, poker
players, military tacticians, or international diplomats. |
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Author:
Ralph Byrns |
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Economics
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