Econometrica, Vol. 40, No.

4 (July, 1972)

A GENERAL FORMULATION OF THE

LECHATELIER-SAMUELSON PRINCIPLE

BY WOLFGANG EICHHORN AND WERNER OETTLI'

In this paper a mathematical theorem by Samuelson on what he calls the "LeChatelier

principle" is generalized, the generalization being closer to the original formulation of the

LeChatelier principle than Samuelson's theorem itself. The results obtained are formulated

in terms of systems theory and mathematical programming. Examples concerning cost

minimization or profit maximization are included.

1. INTRODUCTION

IN 1884 the French chemist H. L. LeChatelier, starting from the problem of thermo-

chemical equilibrium, formulated a heuristic principle, which can be phrased as

follows:

If a system is in stable equilibrium, and one of the conditions is changed, then the

equilibrium will shift in such a way as to tend to annul the applied change in the

conditions.2

This principle, vague though it may be, often allows one to make very useful

qualitative statements. A striking example in this respect is Lenz' law in physics.3

In the 1940's, P. A. Samuelson introduced this principle into economics [7, pp.

36-39] and recast it as a mathematical theorem (whose relationship with the

original formulation of the principle is perhaps not obvious at first glance).

Samuelson's theorem says:

Let F(x, A) = G(x) + Axt be a real-valued function depending on n real variables

(x1i . . . , Xn) = x and n real parameters (l . . ., An) = A. Let x(i) denote a minimum

point of F(x, A) for a given value of the parameter vector A. Then, under suitable dif-

ferentiability assumptions, we have

(1) Oxj(i) < 0 (j n).4

Let us call this the "weak" LeChatelier-Samuelson principle. Samuelson [7, pp.

80-81] has also given a global version, namely,

[x(A2) - x(Al)](A2 - A ) 0,

' The authors are indebted to a referee for his comments concerning both the thermodynamic

background and the distinction between the "weak" and "strong" versions of the principle.

2 The above wording has been compiled from several sources, principally the Encyclopedic Dictionary

of Physics and the Encyclopaedia Britannica. It would be more correct to term this the "weak" Le-

Chatelier principle, since-although only in the more restricted context of "infinitesimally small"

changes-a stronger version is available. We return to this distinction below.

3 "Lenz' law: When the magnetic flux linking a closed circuit is changed, a current is introduced in

the circuit in such a direction as to produce a magnetic flux which opposes the changing flux applied"

(Encyclopedic Dictionary of Physics).

4 We remark in passing, that Samuelson [6] has extended this theorem to the case of certain systems

which are not governed by an extremum principle. See, in this connection, also Morishima [3, pp. 3-14].

711

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712 W. EICHHORN AND W. OETTLI

or briefly,

(2) JX(A)JAi < 0.

It is interesting to note that this global version of Samuelson's theorem has recently

been rediscovered in connection with the problem of chemical equilibrium; cf.

N. Z. Shapiro [9].

Besides the theorem just stated there exists another theorem of Samuelson

which we call the "strong" LeChatelier-Samuelson principle. With the same

notations as before it says:

Let x(A) denote a minimum point of F(x, A), and let x*(i) denote a minimum point

of F(x, A) subject to the constraint P(x) = const. If x(i) = x*(i), then under suitable

differentiability assumptions, we have

(la) X Ai ( 0o5

This theorem, however, cannot be generalized to the case of global increments,

which constitute our main point of interest here. Therefore, in what follows, we

shall always refer to the weak version of the principle.

In this note we shall do the following: In Section 2 we propose a general formula-

tion of the LeChatelier-Samuelson principle. This is stated as Theorem 1, which

contains Samuelson's theorem as a special case and yet is close to the original

formulation quoted above. A part of this generalization lies in the fact that we

avoid any assumptions concerning differentiability or linearity. In Section 3 we

rephrase Theorem 1 in terms of systems theory. In Section 4 we give an example

from the theory of cost. In Section 5 we derive additional conclusions from Theorem

1. Among other things, we show that Samuelson's theorem follows readily from

Theorem 1.

Our approach to the generalized LeChatelier principle uses the framework of

mathematical programming. This has also been done by Samuelson [5], Beckmann

[2], and Bailey [1] in a more restricted context.

2. GENERAL FORMULATION OF THE LECHATELIER-SAMUELSON PRINCIPLE

Let X and A be arbitrary sets. Let A be a subset of X and B a subset of A. Let

F be a real-valued functional defined on the Cartesian product A x B, i.e.,

F:(x,A)eA x B - F(x,A) c-

We denote by M(i) the set of all x E A which minimize F(y, A) subject to the con-

dition y E A. Thus

M(i) = {x E AIF(x, A) = inf F(y, i)}.

yeA

If, for example, in a thermodynamical context we identify x, A, and P with pressure, volume, and

temperature respectively, then (la) would correspond to the fact that the isoentropic pressure-volume

contour has a more negative slope than the isothermic pressure-volume contour, whereas (1) corresponds

only to the fact that the isoentropic pressure-volume contour is negatively sloped.

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LECHATELIER-SAMUELSON PRINCIPLE 713

For reasons which will become clearer in Sections 3 and 5, the following statement

can be considered as a general form of the LeChatelier-Samuelson principle.

THEOREM 1: Let X' E B, X2 E B, x' E M(1'), x2 E M(X2). Then

(3) F(X2, )2) - F(x2, Al) < F(x', A2) - F(x',, Al),

with equality holding if and only if x2 E M(t') and x' E M(i2).

PROOF: Since x' eM(1'), we have

(4) F(x', i') < F(x2, il),

with equality if and only if x2 E M(X'). Similarly

(s) F(X2,.A2) < F(x1, A2)

with equality if and only if xI E M(X2). Adding (4) and (5) and then subtracting

F(x', X2) + F(x2, Al) from both sides at once yields (3). Clearly equality in (3) is

possible if and only if equality holds in both (4) and (5).

REMARKS: (i) If we are concerned with a maximization problem and accordingly

define

M(i) = {x E AIF(x, A) = sup F(y, i)},

yeA

then the inequality sign in (3) is reversed. (ii) Note that (3) is invariant under a

permutation of the indices 1 and 2.

3. A FORMULATION IN TERMS OF SYSTEM THEORY

Suppose that the functional F describes a general "system" (economical, chemical,

physical). Then x is an element ("point," "intrinsic or endogenous variable") of a

"state set" A and A an element ("point," "experimental condition," "control,"

"extrinsic or exogenous variable") of a "parameter set" B. We define the system

as being in "(stable) equilibrium" at (x, A) if x e M(i), i.e., x minimizes F(y, A).

We may furthermore consider the difference F(x, )2) - F(x, Xl) as the "effect,"

evaluated at x, of a change in the "conditions" (parameters) from Al to X2.

In this terminology Theorem 1 can be phrased as follows:

Suppose a system which is in equilibrium at the point (x', Al) is disturbed by a

change in the parameter A from Al to ,2 and assumes a new equilibrium state at the

point (X2, X2). Then the difference

F(X2, A2) - F(X2, Al),

which is a measure of the effect of the disturbance (i.e., of the reaction of the system

to the change) with respect to the point x2, is less than or equal to the difference

F(xw, c 2)e-uF(x r w cl),

which is the corresponding measure with respect to the point xl.

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714 W. EICHHORN AND W. OETTLI

4. AN EXAMPLE FROM THE THEORY OF COST

Let the state space X of Section 2 be the n-dimensional real vector space Mn

and let the parameter space A be Sm. We consider the following model from the

theory of cost.

Suppose that the variable cost F of a certain input vector (x1,.. I, xn) = x E A

depends on x and on the prices (P1, . . ., Pn) = p of the inputs, where these prices

themselves depend on x (e.g., because of quantity discount) and on certain para-

meters (l,. . . , im) = A E B. Thus

(6) F(x, A) = p(x, A)xt.

For example, the parameters may be the world market prices of goods for which

certain input goods can be substituted. If we let A be the set of all input vectors

which can be used to produce a certain fixed output vector (a1, ... , ar) = a,

then, according to our definition x E M(i) if and only if x is an input vector which

produces the vector a at minimal cost.

For this model we draw the following conclusions from Theorem 1.

(i) If the vector A of exogenous variables changes from Al to A' in such a way that

F(x2, t2) > F(x2 Al),

i.e., if the cost of the input vector x2 is increased by the change of the exogenous

variables, then the cost of the input vector xl is increased by at least the same

amount. We have

(7) 0 < F(X2, )2) - F(X2, )l) < F(x1, )2) - F(xl, )l).

(ii) Conversely, if the cost of the input vector x' is decreased by the change of the

exogenous variables, then the cost of the input vector x2 decreases by at least the

same amount.

5. FURTHER CONCLUSIONS FROM THEOREM 1

THEOREM 2 (Samuelson, Shapiro): Let the spaces X and A of Section 2 both be

?n. Let F have the form

(8) F(x, A) = G(x) + Axt.

Let Al E B , 2 E B, xl E M(Al), x2 E M(12 ). Then

(9) - _ 1)(X2 - X1)Z 0 0

with equality holding if and only if x2 E M(l1) and xl C M(e2).

PROOF: The theorem can be proved by substitution of the right-hand side of (8)

for F(x, A) in (3).

REMARKS (i) Samuelson [7, p. 81] relates (9) to the principle of LeChatelier:

"The method employed here6 is that which underlies LeChatelier's principle in

physics. By making use of Professor E. B. Wilson's suggestion that this is essentially

a mathematical theorem applicable to economics, it has been possible to gain

increased generality without increased complexity and emptiness." The term

6 That is, in deriving (9).

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LECHATELIER-SAMUELSON PRINCIPLE 715

"increased generality" pertains to the fact that, under suitable differentiability

assumptions, the local formulation (1) is a consequence of the global formulation

(9), but not conversely.

(ii) Shapiro [9] remarks, in connection with Theorem 2, "The observation is

trivially proved, but it has important consequences for the theory of chemical

equilibria (cf. Shapiro [8], and Passy and Wilde [4])."

(iii) If the price vector p in the model in Section 4 has the form p(x, A) = - with

corresponding costs F(x, A) = Axt, then we conclude from (9) that an increase

(decrease) of the price of a factor results in a decrease (increase) of the quantity

of this factor, provided the prices of all other factors remain constant.

In Theorem 2 the term of (8) which depends on the parameter vector A is a

linear function of x. Let us now consider the case where that term is a quadratic

form in x.

THEOREM 3: Let F have the form

(10) F(x, A) = G(x) + x)xt,

where now A = (Aij) (i,j = 1, ... , n), is a symmetric (n x n)-matrix. Let A' and )2

be two symmetric (n x n)-matrices of parameters and let x' e M(1'), x2 e M(12)

(i.e., x' minimizes G(x) + X)lXt, x2 minimizes G(x) + X12Xt). Then

( 1) (x2 - xl)(2A2 _ l')(x2 + xl)t 0,

with equality holding if and only if x2 E M(;t1) and x' E M(G2).

The proof again follows from (3) by substitution.

We apply Theorem 3 to the following problem of profit maximization. Let

C(x) denote the cost of a firm which produces the output x = (x1, . .. , xn). Let

the market prices (P1, . .. , Pn) = p depend linearly on x, i.e., let pr = a' + Ax',

where A = (Aij) is a nonsingular (n x n)-matrix and a = (a1, . . . , an) is a vector of

positive constants. Then the profit of the firm, namely xpt - C(x) = xat - C(x) +

x{xt, is a function of the form (10). Note that the matrix A in this expression can

be assumed to be symmetric without loss of generality. Now the application of

Theorem 3 to the problem of maximizing the above profit for two different

parameter matrices Al and 23 is straightforward. We have only to reverse the

inequality sign.

If we put

0...-O

(all parameters with the exception of A remain constant), then we conclude from

(11) with " " instead of "",that

[(XJ)2 - (xJ)2]I)JJ > 0.

Hence an increase (decrease) of the (negative) parameter Ajj, i.e., an increase

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716 W. EICHHORN AND W. OETTLI

(decrease) of the price elasticity

Iapj XjI

of demand with respect to the product j results in an increase (decrease) of the

quantity xj supplied by the firm, provided that all other parameters remain fixed.

We now consider the case where A is an arbitrary subset of n B c gm is a

convex domain, and where for any fixed x the function

F:(x,A)eA x B F(x,A) -

is concave for A in B; i.e., for arbitrary x E A, Al E B, )2 E B we have

F(x, oA + cx2) > cF(x, )l) + #F(x, A2){ 0/

c+ /3= 1.

A concave function f: A E B -* f (A) E ` (B as above) has the property that at

each interior point A' of B there exists at least one vector fQJA') with the following

property:

(12) f(A) < fG(A) + (A - AO)f,GAO)1, for all A{eB.

Such a vector is called a subgradient. If f is differentiable, the subgradient is

unique and equal to the gradient

Oef(AO) ONO) Of(AO)/

In the follbwing theorem the expression FJ(x, A) denotes a subgradient of F with

respect to A for fixed x (or the A-gradient of F if it exists).

THEOREM 4: With A, B, and F as described above, let Al E B, )2 E B, xl ' M(e'),

x2 C M(A2) Then

(13) (A2 - Al) [Fj(x2, A2) - Fx(xl, Al)]" < 0.

PROOF :' Since F is concave in A we have by (12)

F(x2, )l) - F(x2, )2) < (Al _ ,A2)F (x2, A2),r

F(x1, -L) - F(x1, 2 _ (2 - i')Fx(xl, jl)r.

Adding' the two inequalities and using (3), we obtain the desired result.

Note that Theorem 4 is a generalization of Samuelson's Theorem 2: if F(x, A) =

G(x) + Axt, then F,(x, A) = x, and (13) becomes (9).

Theorem 4 can be applied to the model in Section 4. Let the cost function (6)

satisfy the concavity hypothesis of Theorem 4,8 and let F(x, A) be differentiable

with respect to A. Then (13) says:

7 A less direct, but more geometrical, proof of this theorem could be based on the facts that jr(A) =

inf {F(x, A)Jx E A} is a concave function, and that F&(A), A), originally defined as a subgradient of F,

is also a subgradient of 0. The theorem would then correspond to a well known monotonicity property

of the directional derivative of a concave function jr, and this interpretation could be of interest even

in the classical case where F is linear in A. We shall discuss such purely geometrical aspects perhaps

elsewhere.

8 This assumption can be justified, if, for example, the A's in (6) are world market prices of goods for

which certain input goods may be substituted.

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LECHATELIER-SAMUELSON PRINCIPLE 717

The marginal cost with respect to Aj, evaluated at the corresponding minimal

cost combination, increases (resp., decreases) as Aj decreases (rcsp.. increa(lses).

Because of the specific nature of the following example, this increase or decrease

is such that a relatively small variation of the minimal cost corresponds to a large

variation of the parameter.

EXAMPLE: The cost function

(14) F(x, A) = A3x, + A6X2

is to be minimized with respect to all input vectors which are feasible for producing

an output a = 10. Let the production function be

I(X1 , X2) = x1x2.

Thus (14) has to be minimized subject to the constraint

x E A = {(x1 , x2)x1 > X20, x1X2 = 10}.

An easy calculation yields that the solution (depending on A) is

(Xl, x2) = 10(2-1/12, A1/12).

The minimal costs as a function of A are then given by

min F(x, A) = 20)A.

xeA

A change of the parameter by 10 per cent thus results in a 2.5 per cent change of

the minimal cost.

InstitutfiJr Wirtschaftstheorie und Operations Research der Universitait Karlsruhe

and

IBM Zurich Research Laboratory

Manuscript received September 1970; revision received December, 1970.

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[1] BAILEY, M. J.: "A Generalized Comparative Statics in Linear Programming," Review of Economic

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[2] BECKMANN, M. J.: "Comparative Statics in Linear Programming and the Giffen Paradox," Review

of Economic Studies, 23 (1956), 232-235.

[3] MORISHIMA, M.: Equilibrium, Stability, and Growth. A Multi-Sectoral Analysis. Oxford: Oxford

University Press, 1964.

[4] PASSY, U., AND D. J. WILDE: "A Geometric Programming Algorithm for Solving Chemical Equili-

brium Problems," SIAM Journal of Applied Mathematics, 16 (1968), 363-373.

[51 SAMUELSON, P. A.: "Comparative Statics and the Logic of Economic Maximizing," Review of

Economic Studies, 14 (1946-47), 41-43.

[6] : "An Extension of the LeChatelier Principle," Econometrica, 28 (1960), 368-379.

[71 Foundations of Economic Analysis. 8th printing. Cambridge: Harvard University Press,

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[8] SHAPIRO, N. Z.: On the Behavior of a Chemical Equilibrium System when its Free Energy Parameters

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[9] : "An Inequality Concerning the Minimum of the Sum of an Arbitrary Function and a

Linear Function," SIAM Journal of Applied Mathematics, 17 (1969), 83.

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