Abstract
In 1943 – with Nazi patrols guarding Paris’ streets – Maurice Allais was writing and dreaming of a better world. He famously argued in favour of selling public monopolies at the marginal cost. Natural monopolies defied free competition and its expected welfare maximizing properties. While free competing agents would have “naturally” set their prices at marginal cost, natural monopolies privately owned would have implied private rents, higher prices and a loss of social return. The war finally came to an end. While Allais was theorizing and campaigning to implement his vision of future prosperity, a group of civil servants (mainly Pierre Massé, Gabriel Dessus and Roger Hutter) started to concretely plan the reconstruction of French public monopolies. Allais, the theoretician, and his pupil Marcel Boiteux quickly convinced them of their new marginalist gospel. But concrete implementation had to face a major constraint: how should marginal cost be calculated?