Diversity, Globalisation and Market Stability
AbstractGlobalisation has become extremely intense since the earlier seventies. Given that the world economy is getting dose to a single market, a more efficient outcome via globalisation can be expected. However, globalisation may also have negative effects. We illustrate our findings through a simple cobweb model where we analyse different shape and slope of the aggregate supply curve. We show that when globalisation is too intensive, it leads to more instability on markets because of a reduction of behavioural diversity. The economic literature indicates that this diversity can be necessary for market stability as well as for macro-economic stability. We demonstrate that as a result of globalisation, the goals or motivations of economic agents may become more uniform (more profit-oriented) and generate market instability.
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Bibliographic InfoPaper provided by University of Queensland, School of Economics in its series Economic Theory, Applications and Issues Working Papers with number 90501.
Date of creation: Feb 2001
Date of revision:
Diversity; Globalisation; Heterogeneity of Behaviour; Instability; Environmental Economics and Policy; Financial Economics;
Other versions of this item:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D40 - Microeconomics - - Market Structure and Pricing - - - General
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- Tisdell, Clement A. & Alauddin, Mohammad, 2002. "Market-Oriented Reforms in Bangladesh and their Impact on Poverty?," Economic Theory, Applications and Issues Working Papers 90521, University of Queensland, School of Economics.
- Laurence Lasselle & Serge Svizzero & Clem Tisdell, 2001. "Heterogeneous Beliefs and Instability," Discussion Paper Series, Department of Economics 200111, Department of Economics, University of St. Andrews.
- Tisdell, Clement A., 2003.
"Economic Competition and Evolution: Are there Lessons from Ecology?,"
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90526, University of Queensland, School of Economics.
- Clem Tisdell, 2004. "Economic Competition and Evolution: Are There Lessons from Ecology?," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 179-193, 04.
- Tisdell, Clem & Seidl, Irmi, 2004.
"Niches and economic competition: implications for economic efficiency, growth and diversity,"
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Elsevier, vol. 15(2), pages 119-135, June.
- Tisdell, Clement A. & Seidl, Irmi, 2001. "Niches and Economic Competition: Implications for Economic Efficiency, Growth and Diversity," Economic Theory, Applications and Issues Working Papers 90508, University of Queensland, School of Economics.
- Tisdell, Clement A. & Svizzero, Serge, 2003. "Globalization, Social Welfare and Labor Market Inequalities," Economic Theory, Applications and Issues Working Papers 90525, University of Queensland, School of Economics.
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