Note 1116 — Chapter I · : THE HEDONISTS

The new school deduces a very curious conclusion from this law of indifference. Although there is only one price for all corn buyers, say, the final utility of the corn for each individual is by no means the same. Let us assume that the price is 20s., but one of the buyers, rather than go without, would possibly have given 25s. for it, and others might have been willing to give 24s., 23s., 22s., etc. Every one of those who ex hypothesi only pay 20s. gains a surplus which Professor Marshall has called consumer’s rent (Principles, Book III, chap. 6). He has given it that name in order to facilitate comparison with producer’s rent, which had gained notoriety long before the Hedonistic school arose. Both are due to similar causes, namely, the existence of differential advantages which give rise to a substantial margin between the selling price and the cost of production.

Really, however, the similarity is simply a matter of words, because consumer’s rent is purely subjective, whereas producer’s rent is a marketable commodity. It would be better to say simply that in many cases of exchange it is not correct to argue that because the prices are equal the satisfaction given to different persons is necessarily equal.