The right price, a lifelong obsession of economists

The tribute was unanimous, carried in the columns of Monde from the platform of great French economists, including 2014 Nobel Prize winner Jean Tirole. Marcel Boiteux, who died in September 2023 at the age of 101, left his mark on French industry as general director and president of EDF, a group within which he set up the French nuclear program.

This world-renowned economist also left behind extensive academic work that changed the management of the electricity industry and, more generally, of all network industries. His contribution to the rules for pricing electricity, and public services in general, will lead to formulas called “Ramsey-Boiteux prices”, still taught in economics courses. His work will enable this disciple of Maurice Allais (Nobel Prize 1988) to succeed John Maynard Keynes, Joseph Schumpeter, Irving Fisher, Wassily Leontief, Paul Samuelson and Kenneth Arrow as president of the prestigious Econometric Society.

The question of setting prices in the face of an “imperfect market” situation, to achieve an “impossible equilibrium”, is one of the favorite subjects of economic researchers since the origins of the discipline, with the reflections of Adam Smith on the subject from the 18th^e century. Generations of economists, particularly French, have worked on the question: Maurice Allais, Roger Guesnerie, Bernard Cornet, Jean Tirole, Olivier Blanchard… “In the 1990s, faced with the great liberation movement in industrialized economies, this research took its full measureexplains Claude Crampes, professor emeritus at the Toulouse School of Economics. It is then necessary to reorganize markets in telecommunications, transport, infrastructure and, of course, energy, and define new pricing. »

Customer distrust

The work of Marcel Boiteux will become decisive: it lays the foundations for what an efficient system must be for a public service based on a resource whose storage is impossible. The supporters of a central decision-making authority will oppose the defenders of the law of the market, liberals who consider that supply and demand can come together.

This question of the right price will offer another formidable playground for economists and sociologists. For decades, researchers have been trying to defuse the feeling of unfairness in the setting of prices, of customers’ distrust of those who define the labels. The theory of George Homans around rational choice and that of Kent Monroe on price perception remind us of the difficulty of the exercise. In 2008, a survey by the Research Center for the Study and Observation of Living Conditions revealed that less than 5% of those questioned declared that the fair price is the price generally observed. This already distinguished, at the time, dynamic pricing as one of the causes of the consumer’s loss of orientation and was concerned about its generalization.