192 LES PRINCIPES MATHEMA.TIQUES DE 



From the case of an absolute monopoly in the hands of a single 

 proprietor, we pass to that where two independent proprietors are 

 supplying the same market. Each of these will endeavour to render 

 his own netjrevenue the greatest possible. If the two proprietors 

 are in precisely similar circumstances, so that the sale by each is 

 the same, then Jollows the curious result that the revenue derived 

 according to the foregoing principle is less than that which would 

 have been derived if the two sources had been united into one, or if 

 the two had entered into partnership. 



" How happens it then that producers, for lack of understanding, fail to 

 stop, as in the case of monopoly or partnership, at the price which in effect gives 

 them the greatest revenue ? The reason is, that if one proJucer had fixed his 

 production in accordance with such a condition, the other might with a momentary 

 benefit carry his production to a higher or lower level: certainly, he would soon 

 be punished for his mistake, because he would force the first to adopt a new level 

 of production which would in return re-act unfavourably upon himself. But these 

 successive reactions, far from bringing the two back to their origiual state, will 

 make them deviate more and more widely from it. In other words, the state 

 supposed will not be one of stable equilibrium ; and although the most favourable 

 for the producers, it will not be able to exist except by a formal compact between 

 them, because we cannot suppose in the moral world men exempt from mistakes 

 and inconsiderateness, any more than in physical nature we find bodies perfectly 

 ri°-id, points of support absolutely fixed, and the like." 



The same reasoning holds when the number of independent pro- 

 ducers is more than two ; the effect of the competition in all cases being 

 to lower the price, a result which indeed we might well have asserted a 

 priori, but which has here for the first time received from our author 

 its logical exposition as a scientific fact. The most important, and 

 the most common of this class of cases, i3 where the concurrence of 

 producers is so great, that any partial production might be cut off with- 

 out sensibly affecting the whole production or the price of the com- 

 modity : here then the effect of monopoly is entirely extinguished, 

 and the benefits of this are are not less felt by the public than by 

 our mathematician, whose calculus is wonderfully simplified in con- 

 sequence. The same principle still governs the price ; an increase 

 in the cost of production, including the case of a specific duty, 

 always raises the price, but to an extent which is in all cases less 

 than the increase of cost ; and any additional expenses incurred by 

 the commodity after it has left the hands of the producers will lessen 

 the price obtained by them. The loss sustained by the producers, by 

 reason of the imposition of a specific duty, is less, while that sustained 

 by the consumers is of itself greater, than the produce of the tax. 

 Duties ad valorem follow precisely the same rule as in the case of a 

 monopoly. 



