ABSTRACT
In 1904, A. C. Pigou discusses monopoly pricing strategy and in 1908 bilateral monopoly, in the case using F. Y. Edgeworth’s concepts of indifference curves and the box diagram. In WW and EW, Pigou sets out the ideas that were to form the field known as welfare economics. Pigou concedes that an increase in economic welfare could be offset by a decrease in non-economic welfare. Pigou will analyze economic welfare in terms of the “national dividend” and its distribution and variability. He concedes that an increase in economic welfare could be offset by a decrease in non-economic welfare. Thus, arguments for policies on the grounds that they increase economic welfare could be defeated by the counterargument that they decrease non-economic welfare to a larger degree. The task undertaken by Pigou successors who created the New Welfare Economics was to recreate his discussion of the allocation of resources without numerical utilities.
