Description - Wealth and Welfare by Arthur Cecil Pigou
This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1912 Excerpt: ... order to live at all, the road must secure two different things--the high rates for its local traffic, and the large traffic of the through points, which can only be attracted by low rates. If they are to have the road, they must have discrimination."1 It is obvious that an exactly argued, discrimination of the first sort involves a special and extra injury, in that it requires the costs to be undertaken of carrying from C to B units of commodity, which would otherwise have been produced at B, and so would have required no carriage over that section. The argument, stated in this way, appears to be fallacious; for, it tacitly assumes that, when the general demand schedule for a service, on the assumption of uniform prices, is given, the system of discriminating prices most profitable to the monopolist will be the same, whether the demands constituting this market are or are not independent. As a matter of fact, however, this is not at all likely to be the case. For example, if two sub-markets, into which the general demand for a service can be divided, are perfect rivals, it will not pay the monopolist to discriminate between them at all, since the only effect of so doing would be to empty altogether the less favoured of the two. Thus, though, where the demands are rival, a part of the injury due to discrimination is likely to come about through unnecessary carriage from C to B, we are not entitled to conclude that the amount of this unnecessary carriage measures the difference in the aggregate loss due to discrimination in the case of rival and independent demands respectively. 1 Railroad Transportation, p. 115. analogous argument in favour of the value of service principle can be constructed in respect of discriminations in the ton-mile rate charged ...
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