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Social Capital and Market Centralisation: A Two-Sector Model

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Author Info
Poulsen, Odile () (Department of Economics, Aarhus School of Business)
Svendsen, Gert Tinggaard () (Department of Economics, Aarhus School of Business)

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Abstract

We develop a two-sector model to analyze which kind of social

organization generates social capital. The hypothesis is that social capital must

be added as an important production factor when considering decentralization

of production. Thus, market centralization processes in a capitalist society eventually

may fragmentize and thus destroy social capital if the positive externality

of local production and social capital is not taken into account. To our knowledge,

no such attempt to model social capital has yet been undertaken and this

gap or ‘missing link’ in economic debates has to be developed to grasp a more

holistic understanding of the big differences in the wealth of nations or regions.

The model shows that if the policy maker decides to centralize the economy,

then the economy moves from an potentially stable equilibrium to an unstable

one that may under certain condition even fluctuate forever.

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Publisher Info
Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 04-12.

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Length: 25 pages
Date of creation: 10 Dec 2004
Date of revision:
Handle: RePEc:hhs:aareco:2004_012

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx
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Related research
Keywords: Social capital; market centralization; two-sector model; economic growth growth;

Other versions of this item:

Find related papers by JEL classification:
A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
D60 - Microeconomics - - Welfare Economics - - - General
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October. [Downloadable!] (restricted)
  2. Paldam, Martin & Svendsen, Gert Tinggaard, 2000. "Missing social capital and the transition in Eastern Europe," Working Papers 00-5, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
    Other versions:
  3. Goenka, A. & Poulsen, O., 2002. "Indeterminacy and Labor Augmenting Externalities," Working Papers 02-9, University of Aarhus, Aarhus School of Business, Department of Economics.
    Other versions:
  4. Paldam, Martin, 2000. " Social Capital: One or Many? Definition and Measurement," Journal of Economic Surveys, Blackwell Publishing, vol. 14(5), pages 629-53, December. [Downloadable!] (restricted)
  5. Jean-Pierre Drugeon & Odile Poulsen & Alain Venditti, 2003. "On Intersectoral allocations, factors substitutability and multiple long-run growth paths," Economic Theory, Springer, vol. 21(1), pages 175-183, 01. [Downloadable!] (restricted)
  6. Drugeon, Jean-Pierre & Venditti, Alain, 2001. "Intersectoral external effects, multiplicities & indeterminacies," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 765-787, May. [Downloadable!] (restricted)
  7. North, Douglass C, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter. [Downloadable!] (restricted)
  8. Anders Poulsen & Gert Svendsen, 2005. "Social Capital and Endogenous Preferences," Public Choice, Springer, vol. 123(1), pages 171-196, April. [Downloadable!] (restricted)
  9. Nishimura, Kazuo, 1985. "Competitive equilibrium cycles," Journal of Economic Theory, Elsevier, vol. 35(2), pages 284-306, August. [Downloadable!] (restricted)
  10. Paldam, Martin & Svendsen, Gert Tinggaard, 2000. "An essay on social capital: looking for the fire behind the smoke," European Journal of Political Economy, Elsevier, vol. 16(2), pages 339-366, June. [Downloadable!] (restricted)
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