Carl Friedrich Wilhelm Launhardt (1832-1918) was by training and profession a transportation engineer, but he is now remembered chiefly for his pioneer work in the application of mathematical techniques to economic problems. He lived and worked virtually all his life in Hanover, Germany, as professor of highway, railroad, and bridge construction at the Poly technical College. He received an honorary engineering doctorate in 1903 from the Institute of Technology at Dresden in recognition of basic work done on the technical and economic problems of transportation, in particular, of railroads. Not all his economic thinking was original, of course; on questions of capital and interest, for example, his ideas in general followed those of Leon Walras and Stanley Jevons. But he made important contributions towel fare economics, to pricing policies for publicutilities, to industrial-location and market-area analysis, and to transportation-engineering economics in the narrow sense, as well as doing original work on the labor-supply function(1885, pp. 88-97).
Welfare economics . Much of Launhardt’s writing in the area of welfare economics, although embedded in price theory, often delves into side areas that anticipate recent developments. For instance, his treatment of “repeated exchange” and “exchange with continually changing prices” in its dependence on the number of market participants (1885, pp. 35-53)fore shadows the basic theme, if not the results, of Oskar Morgenstern’s demand theory (1948) rather than being simply a version of Walrasian tdtonnement.
KnutWicksell(1901)impliedthatLaunhardt had supplied a pseudo proof of the proposition that pure, perfect competition leads to the greatest social income. However, Launhard texplicitly disagreed with this proposition; infact, in criticism of Walras, he branded sucha conclusion as a“grave error” (1885, pp. 27-33, 42-44).
Public utility pricing policies . Launhardt’s analysis of railroad costing and pricing(e.g., 1885, pp. 189-205), while in the spirit of Walras and Jevons, hasbeenacclaimedfor its originalityandclarity. His analysis is marred by the spuriousdefmiteness that resultsfromhisassumption of specificfunction forms. He opposed private ownership of rail-roads, since he favored marginal-cost pricing and differential freight rates, and believed that overhead costs should be paidout of general taxation in a manner dictated by over-all fiscal policies. Similar studies had beend one both by Jules Dupuit and by Emile Cheysson and Clement Colson. The latter twowere contemporaries of Launhardt’s and, like him, combined engineering with economics.
Industrial location and market area . In the words of Walter Isard (1956, pp. 143, 160), Launhardt“presentedthefirstsignificant treatment of industrial location theory” and “the earliest systematictreatmentofthedivision ofthemarket-area amongcompetingfirms”(see Launhardt 1885, pp. 149-214). Although Johann Heinrichvon Thlinen had previously discussed industrial location, varying the circumstances more than Launhardt was to do, still Launhardt’s location theories contain the germs of ideas later developed by Alfred Weber, Tord Palander, and morerecent theorists. For example, he sketched the pole principle: a geometric construction for finding locational equilibrium points (Isard 1956, pp. 254-287). In the Launhardt-Hotelling problem, however, Launhardt did not simultaneously vary price and location; that remained for Harold Hotelling(1929)to do.
Transportation-engineering economics . Inthe field of transportation-engineering economics, which lay closerto his mainoccupation,Launhardtinvestigatedsuchmattersas the influence ofgradients and curves on railroadoperating costs (1877) andthelocation-dependent“rentability”ofhighways andrailroads.
Eberhard M. Fels
[For the historical context of Launhardt’s work, see the biographiesofJevons; Thunen; Walras; for discussion of the subsequent developmentof his ideas, seeSpatial Economics; Welfare Economics; and the biography of Weber, Alfred.]
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Isard, Walter 1956 Location and Space-economy: A General Theory Relatingto IndustrialLocation, Market Areas, Tradeand Urban Structure. Cambridge, Mass.: TechnologyPress of M.I.T.; New York:Wiley.
Morgenstern, Oskar 1948 DemandTheory Reconsidered.QuarterlyJournal of Economics62:165-201.
Schneider, Erich 1959 Wilhelm Launhardt. Volume 6, pages533-534 in Handworterbuchder Sozialwissenschaften.Stuttgart(Germany): Fischer.
Wicksell, Knut (1901)1951 Lectures on Political
Economy. Volume 1: General Theory. London : Rout-ledge.->Translated from the third Swedish edition.