Front Page Titles (by Subject) Part II, Chapter II: Of Market Prices - Essai sur la Nature du Commerce en Général
The Online Library of Liberty
A project of Liberty Fund, Inc.
Search this Title:
Also in the Library:
Part II, Chapter II: Of Market Prices - Richard Cantillon, Essai sur la Nature du Commerce en Général 
Essai sur la Nature du Commerce en General, edited with an English translation and other material by Henry Higgs, C.B. Reissued for The Royal Economic Society by Frank Cass and Co., LTD., London. 1959.
About Liberty Fund:
This title is put online with the kind permission of the original copyright holders, the Royal Economic Society.
Fair use statement:
Part II, Chapter II
Of Market Prices
Suppose the Butchers on one side and the Buyers on the other. The price of Meat will be settled after some altercations, and a pound of Beef will be in value to a piece of silver pretty nearly as the whole Beef offered for sale in the Market is to all the silver brought there to buy Beef.
This proportion is come at by bargaining. The Butcher keeps up his Price according to the number of Buyers he sees; the Buyers, on their side, offer less according as they think the Butcher will have less sale: the Price set by some is usually followed by others. Some are more clever in puffing up their wares, other in running them down. Though this method of fixing Market prices has no exact or geometrical foundation, since it often depends upon the eagerness or easy temperament of a few Buyers or Sellers, it does not seem that it could be done in any more convenient way. It is clear that the quantity of Produce or of Merchandise offered for sale, in proportion to the demand or number of Buyers, is the basis on which is fixed or always supposed to be fixed the actual Market prices; and that in general these prices do not vary much from the intrinsic value.
Let us take another case. Several maîtres d'hôtels [at Paris] have been told to buy green Peas when they first come in. One Master has ordered the purchase of 10 quarts5 for 60 livres, another 10 quarts for 50 livres, a third 10 for 40 livres and a fourth 10 for 30 livres. If these orders are to be carried out there must be 40 quarts of green Peas in the Market. Suppose there are only 20. The Vendors, seeing many Buyers, will keep up their Prices, and the Buyers will come up to the Prices prescribed to them: so that those who offer 60 livres for 10 quarts will be the first served. The Sellers, seeing later that no one will go above 50, will let the other 10 quarts go at that price. Those who had orders not to exceed 40 and 30 livres will go away empty.
If instead of 40 quarts there were 400, not only would the Maîtres d'hôtels get the new Peas much below the sums laid down for them, but the Sellers in order to be preferred one to the other by the few Buyers will lower their new Peas almost to their intrinsic value, and in that case many Maîtres d'hôtels who had no orders will buy some.
It often happens that Sellers who are too obstinate in keeping up their price in the Market, miss the opportunity of selling their Produce or Merchandise to advantage and are losers thereby. It also happens that by sticking to their prices they may be able to sell more profitably another day.
Distant Markets may always affect the prices of the Market where one is: if corn is extremely dear in France it will go up in England and in other neighbouring Countries.
[5.]1 litron = 2 1/3 pints. Postlethwayt has "measures." [N.B. Higgs has translated "litron" as "quart."—Econlib Ed.]