Cournot's views on the effects of international trade on social income have received little attention. Drawing upon a comprehensive analysis of Cournot's writings, this article shows that Cournot distinguished between variations in nominal income and variations in real income. He introduced the principle of compensation of demands: if the price of a commodity changes, the value of the total demand for other commodities remains unchanged. He relied on this principle to demonstrate that a unilateral removal of trade restrictions can cause real income to fall. Under specific circumstances, protective tariffs may be warranted. Cournot thus endorsed the infant-industry argument without being a die-hard protectionist. The article discusses the arguments of his critics and concludes that many commentators have misrepresented his thinking.

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