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Do the Economies of Specialization Justify the Work Ethics? A Further Examination of Buchanan's Hypothesis

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  • Yew-Kwang Ng

    (Department of Economics, Monash University)

Abstract

Ng & Ng (2003) provide a qualified support for Buchanan's (1991, 1994) hypothesis on work ethics by showing that a decrease in preference for leisure (a higher work ethics) by an individual benefits her trading partners by improving the terms of trade of the latter. Moreover, the higher the degree of the economies of specialization, the larger is this beneficial effect. Using a similar model, the present paper shows that a simultaneous artificial decrease in preference for leisure by all individuals decreases intrinsic utility evaluated at the original preference. However, using a more realistic model allowing for both home and firm/market production developed by Ng & Zhang (2005), a stronger support is provided for Buchanan's hypothesis as a shift in preference by everyone from leisure to market goods produced under increasing returns and average-cost pricing increases utility even if evaluated in accordance with the original preference.

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Bibliographic Info

Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 7 (2006)
Issue (Month): 2 (November)
Pages: 385-403

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Handle: RePEc:cuf:journl:y:2006:v:7:i:2:p:385-403

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Related research

Keywords: Work; Leisure; Increasing returns; Specialization; Ethics; Buchanan;

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References

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  1. Dixit, Avinash K & Stiglitz, Joseph E, 1979. "Monopolistic Competition and Optimum Product Diversity: Reply," American Economic Review, American Economic Association, vol. 69(5), pages 961-63, December.
  2. Sun, Guang-Zhen & Yang, Xiaokai & Zhou, Lin, 2004. "General equilibria in large economies with endogenous structure of division of labor," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 237-256, October.
  3. Ng, Yew-Kwang & Ng, Siang, 2003. "Do the economies of specialization justify the work ethics?: An examination of Buchanan's hypothesis," Journal of Economic Behavior & Organization, Elsevier, vol. 50(3), pages 339-353, March.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  5. Dingsheng Zhang & Yew-Kwang Ng, 2004. "Average-cost Pricing, Increasing Returns, and Optimal Output in a Model With Home and Market Production," Econometric Society 2004 Australasian Meetings 322, Econometric Society.
  6. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
  7. Yew-Kwang Ng, 2003. "From preference to happiness: Towards a more complete welfare economics," Social Choice and Welfare, Springer, vol. 20(2), pages 307-350, March.
  8. Yang, Xiaokai & Heijdra, Ben J, 1993. "Monopolistic Competition and Optimum Product Diversity: Comment," American Economic Review, American Economic Association, vol. 83(1), pages 295-301, March.
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