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THE ECONOMIC JOURNAL
Do to D1, whereas the variation of the nominal revenue is
Dopo — D1p1, the loss in real revenue is (Do — D1)po.
I do not indeed pretend to follow the double route by which
Cournot, winding his way through additions and subtractions of
producers ‘ and consumers ’ gain and loss,1 reaches this conclusion
{Principes Mathématiques, ch. xi., and corresponding passages in
the Principes of 1863 and the Bevue Sommaire). Nor can I ex-
plain why, upon the interpretation of real revenue here suggested,
the loss due to a rise of price should be formulated as (Do — D1),
multiplied by po rather than p1 ; except so far as in the method in
question there must be always something arbitrary in the selection
of the price to be operated with.
However the conception of ‘ real revenue ’ may be interpreted,
it does not seem appropriate to the problems in hand. According
to Cournot the real revenue of a country is diminished by the
admission of an' additional import through the removal of a
restriction on trade. The capital objection to this conclusion is
that no account is taken of that sort of advantage coming from
cheapness which we should now describe as Consumer’s Bent.
Cournot explicitly makes abstraction of this advantage. He says
of it—
Dans l’évaluation de l’accroissement réel du revenu social, causé par la baisse de
prix, on ne tient pas compte de l’avantage qui consiste, pour les nouveaux con-
sommateurs de la denrée, à faire un emploi plus à leur goût d’une portion de leurs
revenus ; parce que cet avantage n’est pas numériquement appréciable.’ (Art 81.)
Of the corresponding loss he says :—
‘ Il s’agit ici d’un de ces rapports d’ordre, et non pas de grandeur, que les nom-
bres peuvent bien indiquer, mais non pas mesurer . . . nos considérations ne portent
que sur les choses mesurables. (Art. 77.)
Ce dommage n’est pas mesurable et n’affecte pas directement la richesse nation-
ale, dans l’acception commerciale et mathématique de ce mot.’ (Art. 88.)
l Prof. Seligman seems to follow Cournot without hesitation. He puts the fohow-
ing case (Shifting and Incidence of Taxation, p. 153) : ‘ Suppose that the price of
the commodity was Originahy $10, at which price 10,000 pieces were sold. Now a
tax of $2 is imposed, all of which is shifted to the consumer. At the new price,
however, only 8,000 pieces will be sold.’ Manipulating the producers’ and con-
sumers’ loss in Cournot’s fashion, Prof. Seligman reaches the conclusion that ‘ the
diminution in the real revenue = $20,000.’
As it seems to me, the essential fact is that there has been a diminution of the
national wealth to the extent of 2,000 pieces of the taxed commodity. It is arbitrary
whether we multiply this 2,000 by 10, the old price, or 12, the new price, with a
view of ascertaining (after the manner of Mr. Griffen) the variation in the total
quantity of national wealth, provided that, in dealing with other items of national
wealth at the two periods, we employ the corresponding prices—either the old
prices or the new. Perhaps the best price to operate with would be a mean of the
old and new price, in the case before us $11.