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The division of labor and the extent of the market

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Author Info
Haiwen Zhou ()

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Abstract

A firm’s degree of specialization is modeled as the number of different goods it produces. When a firm chooses its degree of specialization, it faces a tradeoff between the fixed cost and the marginal cost of production. A firm’s degree of specialization is shown to increase with the extent of the market. Meanwhile, the real wage rate, as a measure of the extent of the market, is endogenously determined in the model and is shown to increase with the division of labor. Copyright Springer-Verlag Berlin/Heidelberg 2004

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File URL: http://hdl.handle.net/10.1007/s00199-003-0415-y
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Publisher Info
Article provided by Springer in its journal Economic Theory.

Volume (Year): 24 (2004)
Issue (Month): 1 (07)
Pages: 195-209
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Handle: RePEc:spr:joecth:v:24:y:2004:i:1:p:195-209

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Related research
Keywords: Division of labor; Extent of the market; Specialization; Increasing returns to scale.;

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This page was last updated on 2009-12-22.

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