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Infrastructure and Evolution in Division of Labor

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  • Wen, Mei

Abstract

This paper studies the relationship between infrastructure expenditure and endogenous growth generated by spontaneous evolution of division of labor. It identifies the necessary condition for infrastructure expenditure to take place and its equilibrium time path. Dynamic equilibrium shows that the optimal infrastructure expenditure, the size of the market network, and the level of division of labor increase concurrently. While infrastructure can promote the evolution of division of labor through reducing the unit transaction cost, the total transaction cost each consumer-producer incurs rises as the optimal income share of infrastructure expenditure increases with economic development. Copyright 1997 by Blackwell Publishing Ltd

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  • Wen, Mei, 1997. "Infrastructure and Evolution in Division of Labor," Review of Development Economics, Wiley Blackwell, vol. 1(2), pages 191-206, June.
  • Handle: RePEc:bla:rdevec:v:1:y:1997:i:2:p:191-206
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    Cited by:

    1. Wen, Mei & King, Stephen P., 2004. "Push or pull? The relationship between development, trade and primary resource endowment," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 569-591, April.
    2. Cheng, Wenli & Yang, Xiaokai, 2004. "Inframarginal analysis of division of labor: A survey," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 137-174, October.
    3. Wen, Mei, 2004. "E-commerce, productivity, and fluctuation," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 187-206, October.

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