Cournot’s achievements
Cournot’s contributions represented such a radical shift that it was first overlooked by most analysts, including economists who were probably able to grasp his mathematical demonstrations.
When Walras, Jevons and Marshall rediscovered Cournot’s work, it was somehow misinterpreted. The debate on his duopoly model shows that his critics - economists or mathematicians - instead of trying to understand his approach, sought to uncover errors he never made. They forgot that, as Cournot conceded, he used abstractionsthat are not naturally evident for everyone; sometimes there is a part of discretion. [For some], what is neglected as a secondary and accessory fact, will be treated by others as a principal fact on which a theory must be built. Thus, contradictory theories will emerge, with none of them being wrong properly speaking, though they are incomplete and... incorrect in their application.
(1877, 184)
Bertrand, Edgeworth and Fellner misinterpreted Cournot’s work. In fact, they adopted assumptions that were different from Cournot’s. As Edward H. Chamberlin (1929, 91) correctly pointed out, “duopoly is not one problem, but several. The solution varies, depending upon the conditions assumed, being, with minor exceptions, determinate for each assumption made”.
Cournot’s contributions are impressive. His work on price theory is well- known. He introduced ground-breaking concepts that his followers would later study more closely: marginal revenue, marginal cost, the existence, unicity, and stability of an equilibrium. He demonstrated that the revenue derived from an indirect tax is less than the burden borne by taxpayers. Other aspects of his work have been overlooked, but they are equally valuable. By developing the principle of compensation of demands, he suggested a possible foundation to partial equilibrium analysis, which differs from the framework later used by Marshall. He introduced the notion of social income - the equivalent of today’s national income - and suggested a method to measure its nominal and real variations. He applied this concept to the analysis of the communication of markets, and he showed that a country which lifts an import ban with no compensation can become worse off. However, as always, he cautiously refrained from drawing policy conclusions out of this result.