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A Critical Evaluation of Jules Dupuit's Contributions to Economic Theory and Policy Louisiana State University LSU Digital Commons LSU Historical Dissertations and Theses Graduate School 1967 A Critical Evaluation of Jules Dupuit's Contributions to Economic Theory and Policy. Robert Burton Ekelund Jr Louisiana State University and Agricultural & Mechanical College Follow this and additional works at: https://digitalcommons.lsu.edu/gradschool_disstheses Recommended Citation Ekelund, Robert Burton Jr, "A Critical Evaluation of Jules Dupuit's Contributions to Economic Theory and Policy." (1967). LSU Historical Dissertations and Theses. 1244. https://digitalcommons.lsu.edu/gradschool_disstheses/1244 This Dissertation is brought to you for free and open access by the Graduate School at LSU Digital Commons. It has been accepted for inclusion in LSU Historical Dissertations and Theses by an authorized administrator of LSU Digital Commons. For more information, please contact [email protected]. This dissertation has been microfilmed exactly as received 67-8775 EKELUND, Jr., Robert Burton, 1940- A CRITICAL EVALUATION OF JULES DUPUIT'S CONTRIBUTIONS TO ECONOMIC THEORY AND POLICY. Louisiana State University and Agricultural and Mechanical College, Ph.D., 1967 Economics, theory University Microfilms, Inc., Ann Arbor, Michigan CRITICAL EVALUATION OF JULES DUPUIT'S CONTRIBUTIONS TO ECONOMIC THEORY AND POLICY A Dissertation Submitted to the Graduate Faculty of the Louisiana State University and Agricultural and Mechanical College in partial fulfillment of the requirements for the degree of Doctor of Philosophy in The Department of Economics ,by Robe rt B-'. " Eke lund, Jr. B.B.A., St. Mary's University, 1962 M.A., St. Mary's University, 1963 January, 1967 ACKNOWLEDGMENT This writer would like to sincerely thank the mem­ bers of his committee, Dr. J. P. Payne, Dr. W. J. Stober, Dr. W. F. Campbell, Dr. T. R. Beard, Dr. R. A. Flammang and Dr. R. Williamson for their encouragement and con­ structive criticisms in the preparation of this disser­ tation. This writer would like to express a very special debt of appreciation to Dr. W. J. Stober for having generously contributed to his understanding of many difficult points. To his dissertation director, Dr. J. P. Payne, this writer owes the largest measure of appreciation for having suggested research on Dupuit and for having liberally contributed his time to its development. This writer, of course, assumes sole responsibility for the results. Appreciation is also extended to Dr. William Ross, Dean of the College of Business Administration, and to the L.S.U. Foundation for having made the translation of Dupuit1s works possible; to Mr. Robert F. Hebert, Mrs. Kathie Gilbert and Mr. Larry Falk, fellow graduate students, for their helpful evaluations of various parts of the ii manuscript; to his typists, Esther Gunn and Theresa St. Pierre; to his translators, Eleanor Evans and Candace Uter; and to his draftsman, Mrs. Sylvia Falk. Most of all, this writer would like to express genuine appreciation for his parents' assistance, encourage­ ment and patience during the preparation of this disser­ tation. iii TABLE OF CONTENTS CHAPTER Page ACKNOWLEDGMENT ................................ ii LIST OF TABLES ................................ vii LIST OF FIGURES................................ viii ABSTRACT ....................................... ix I. INTRODUCTION.................................. 1 Purpose and Scope ........................ 1 Sources .................................. 8 Bibliographical Orientation ............. 12 II. UTILITY - DEMAND THEORY........................ 22 The Subjective Theory of Value........... 22 Dupuit and J.B. Say - A critique of classical value theory............. 23 The Smith-Say Paradox and the Marginal Utility Theory..................... 27 Dupuit's Demand Curve ................... 36 Cournot and Dupuit on Utility and Demand.............................. 38 From Utility to Demand ............... 41 Characteristics of Dupuit1s Demand C u r v e .............................. 50 III. DUPUIT AND CONSUMERS' SURPLUS................. 59 The Theory of Consumers' Surplus......... 59 Problems with Dupuit's Measurement . 62 Early Criticisms of Dupuit's Consumers' Surplus Concept .......................... 67 The Bordas Reply ..................... 67 Dupuit's Rejoinder ................... 78 Walras and Dupuit's Concept of Con­ sumers' S u r p l u s ................... 84 iv CHAPTER Page Dupuit and Marshall on Consumers1 S u r p l u s .................................. 89 The Two Formulations Compared...... 97 Some Post-Marshallian Developments. 102 The Hicksian Rehabilitation........... 108 The Status of the Dupuit-Marshall " M e asure............................ 120 IV. DUPUIT'S MONOPOLY - PRICE DISCRIMINATION THEORY ......................................... 123 Introduction.............................. 123 Dupuit1 s Monopoly Theory.............. 125 Dupuit1s Theory of Price Discrimination . 143 Types and Desirability of Discrimin­ ation ................................ 155 Dupuit's Influence on Subsequent T h e o r i s t s ........................ 161 An Evaluation of Dupuit1s Contribution 166 V. DUPUIT'S MARGINAL COST PRICING ARGUMENT: APPLICATIONS OF ECONOMIC THEORY TO PUBLIC POLICY ...................................... 171 Introduction........................... 171 The Demand Curve and Utilite Perdue . 175 The Measure of Utilite Perdue...... 178 Welfare Implications of Utilite Perdue........................... 181 Dupuit and Marginal Cost Pricing........ 185 The Case of the B r i d g e .............. 187 The Issue of C o s t s ................... 193 The Issue of Taxation................ 199 Some Conclusions.................. 204 The Development of Welfare Theory, Mar­ ginal Cost Pricing and Dupuit's Contribution — A Brief Discussion . 207 Dupuit's Applications of Economic Theory to Public P o l i c y .................. 219 VI. THE CONTRIBUTION OF DUPUIT: AN EVALUATION IN PERSPECTIVE, ..................................... 226 v CHAPTER Page Dupuit as an Economic Theorist......... 226 Dupuit and Economic Policy............. 234 Dupuit and the Polemics of His Period . 238 Dupuit1s Influence on the History of Economic Theory..................... 245 BIBLIOGRAPHY ................................ 250 APPENDIX I .................................. 257 APPENDIX II.................................. 261 APPENDIX I I I ................................ 265 VITA ......................................... 271 vi LIST OF TABLES TABLE Page 4-1 A Monopoly Demand and Utility Calcu­ lation 128 4-2 The Two-Class Tariff.................... 137 5-1 Dupuit' s Bridge C ...................... 190 vii LIST OF FIGURES FIGURE Page 2-1 Utility Function for Water............. 29 2-2 Marginal Utility Function - Water ... 43 2-3 Dupuit1s Courbe De Consommation .... 49 3-1 The Demand Curve as a Welfare Measure . 60 3-2 The Bordas Variation.................... 7 5 3-3 The Hicksian Reconstruction ............ 114 5-1 The Effects of a Tax on Utilite Perdue. 176 5-2 Monopoly Effects on Utilite Perdue. 180 5-12-1 The Linear Demand Curve and Utilite Perdue.................................. 183 III-l Monopoly and the Distribution of U t i l i t y ................................ 268 viii ABSTRACT The economics of the 19th century French engineer, Jules Dupuit, has received but scant attention. His contributions to various areas of economic theory, how­ ever, were appreciated in varying degrees by several important neo-classical theorists. These and later acknowledgments were made primarily to two of Dupuit's major economic works, and of them, only F. Y. Edgeworth presented excerpts from the original source. Neo-classical and contemporary evaluations, moreover, have focused on specific points of Dupuit1s analysis, and little attempt has been made to evaluate or appraise his total con­ tribution. The purpose of this research has been to investigate and analyze Dupuit1s contributions to economic theory and policy in a larger framework. To this end, translations of some of his importaht economic works have been required. Dupuit presented the first important statement of the marginal utility theory of value, but he did not rest content with the statement that marginal utility diminishes with quantity. Adding the marginal utility functions of ix individuals, he obtained an aggregate marginal utility curve and identified it with a market demand function. This addition, together with the identification of demand and utility functions, is legitimate only under certain restrictive assumptions. The marginal utility of money, for example, must be assumed constant in order for the demand curve to represent utility. Nonetheless, Dupuit used the identification to develop several important welfare concepts. Consumers' surplus or "relative utility," as Dupuit called it, was the difference between what individuals had to pay and what they would be willing to pay for a quantity of a good. This concept of consumers' surplus played an important role in Dupuit's interpretations of the pricing behavior of firms. Dupuit analyzed, independently of Cournot, the pro­ fit maximizing behavior of the simple monopolist. He saw monopoly at the apex of a range of problems regarding the size and distribution of welfare. The amount of "absolute utility" (or what could be called total net benefit) was lessened by monopoly profit maximization. Dupuit also pointed out that the interests of the profit maximizing monopolist could be inimical to the welfare x interests of consumers. It is interesting to note that Alfred Marshall's doctrines
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