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 Department of Economics, University of St. Andrews in its series Discussion Paper Series, Department of Economics with number 200101.
Date of creation: 15 Dec 2001
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- Lasselle, Laurence & Svizzero, Serge & Tisdell, Clement A., 2001. "Diversity, Globalisation and Market Stability," Economic Theory, Applications and Issues Working Papers 90501, University of Queensland, School of Economics.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D4 - Microeconomics - - Market Structure and Pricing
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