Cournot’s Trade Theory and its Neoclassical Appropriation: Lessons to be Learnt about the Use and Abuse of Models
This paper is closed for comments.
The ubiquitous partial equilibrium model of trade owes its origins to the work of Augustin Cournot. While Cournot’s name is a staple in economic textbooks, usually in relation to oligopoly theory, his work on trade has vanished from view. This is all the more surprising, given that the partial equilibrium model that he developed, to show the effects of trade, is still in use today, but without attribution. This paper aims to address why this is the case. Key to understanding the neglect of Cournot’s trade theory is to realise that he arrived at very different conclusions on the effect of trade than did his neoclassical successors, notwithstanding their deployment of a similar set of tools.