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Specialization, Information, and Growth: A Sequential Equilibrium Analysis

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  • Yew‐Kwang Ng
  • Xiaokai Yang

Abstract

Pricing costs and information problems are introduced into a framework with consumer‐producers, economies of specialization, and transaction costs, to predict the endogenous and concurrent evolution of the division of labor and of information concerning economic organization acquired by society. Concurrent evolution generates endogenous growth based on the tradeoff between gains from information about the efficient pattern of the division of labor—which can be acquired via experiments with various patterns—and experimentation costs, which relate to the costs of discovering prices. The concept of Walras sequential equilibrium is developed to analyze the social learning process which is characterized by uncertainties in the direction of the evolution and by a certain trend of the evolutionary process.

Suggested Citation

  • Yew‐Kwang Ng & Xiaokai Yang, 1997. "Specialization, Information, and Growth: A Sequential Equilibrium Analysis," Review of Development Economics, Wiley Blackwell, vol. 1(3), pages 257-274, October.
    • Handle: RePEc:bla:rdevec:v:1:y:1997:i:3:p:257-274
    DOI: 10.1111/1467-9361.00018
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    Cited by:

    1. Davis, Lewis S., 2006. "Growing apart: The division of labor and the breakdown of informal institutions," Journal of Comparative Economics, Elsevier, vol. 34(1), pages 75-91, March.
    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. W. Max Corden & Peter Forsyth & Christis G. Tombazos, 2008. "Distinguished Fellow of the Economic Society of Australia, 2007: Yew‐Kwang Ng," The Economic Record, The Economic Society of Australia, vol. 84(265), pages 267-272, June.
    4. Jeffrey Sachs & Wing Thye Woo & Xiaokai Yang, 2000. "Economic Reforms and Constitutional Transition," Annals of Economics and Finance, Society for AEF, vol. 1(2), pages 423-479, November.
    5. Phillips, Kerk L., 2010. "A Dynamic Model of Specialization and Market Development as Engines of Economic Growth," MPRA Paper 23500, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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