SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC. 
[12 
The quantity R, represents the value of primary factors of 
production, wages and rents; R stands for National Income, 
Rc consumed national income, and C the value of reproducible 
capital. Measurements are made at factor cost. Real values of 
‘hese variables are indicated by a bar over the symbol con- 
cerned. 
The equations (110-9) and (110-10) define capital-output 
as part of reproducible capital and appear in the vear’s total 
~onsumption respectively. 
For the sake of generality, consumed national income is 
defined to include only such consumption as takes place at 
‘he time. For example, private motor vehicles are evaluated 
as part of reproducible capital and appear in the years total 
~onsumption only in respect of the services they render. 
Characteristic functions 
mr. This study is based on the concept of the characteristic 
function, which so far as I know was first described bv JEVONS 
in 1871 in the context of a particular model (!). I presented a 
systematic analysis of this concept in Economy and Interest 
in 1947. 
The simplest way of envisaging the curve which is charac- 
teristic of a production process (see Figure I below) would ap- 
dear to be as follows. Assume that in the present period wages 
are paid in respect of the construction of a blast furnace, which 
will in due course produce pig-iron. The pig-iron will be used 
‘o produce steel, which will in turn find its way into different 
manufacturing industries, to be used, for example, in making 
() JEVONS (1871) in chapter VII. The concept of the characteristic 
‘unction was used for the first time for the case in which @(8)z#%0 for 
9<6<A and ¢(6)=o0 for 1 <0. 
The concept was subsequently applied in penetrating studies by BOHM- 
BAWERK (1888) (see especially Exkurs I to VI) and G.H. BousoUEtT (1936), 
vol. III. chanter VI 
11] Allais - pag. 10