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Micro-foundations of External Economies

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  • James R. Markusen

Abstract

The first purpose of this paper is to specify certain microeconomic determinants of "external" economies and then analyze the consequences of these economies for production and welfare in a simple general-equilibrium model. The second purpose is to explore the circumstances under which the implied industry production functions are consistent with the ad hoc specifications used in trade theory and growth theory. The motivation for the latter exercise is that, despite progress in general-equilibrium analysis of internal economies, these industry production functions allow the author to capture the very powerful analytical advantages of competitive general-equilibrium and duality theory.

Suggested Citation

  • James R. Markusen, 1990. "Micro-foundations of External Economies," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 495-508, August.
  • Handle: RePEc:cje:issued:v:23:y:1990:i:3:p:495-508
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    Cited by:

    1. Fæhn, Taran & Gómez-Plana, Antonio G. & Kverndokk, Snorre, 2009. "Can a carbon permit system reduce Spanish unemployment?," Energy Economics, Elsevier, vol. 31(4), pages 595-604, July.
    2. C J Krizan, 1998. "Industrial Spillovers in Developing Countries: Plant-level Evidence From Chile, Mexico, and Morocco," Working Papers 98-1, Center for Economic Studies, U.S. Census Bureau.
    3. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    4. Balistreri, Edward J., 2002. "Operationalizing equilibrium unemployment: A general equilibrium external economies approach," Journal of Economic Dynamics and Control, Elsevier, vol. 26(3), pages 347-374, March.
    5. Snorre Kverndokk & Knut Rosendahl & Thomas Rutherford, 2004. "Climate Policies and Induced Technological Change: Which to Choose, the Carrot or the Stick?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(1), pages 21-41, January.
    6. Krzysztof Makarski, 2012. "Division of Labour and Innovation with Indivisibilities: Lessons from A. Smith," Bank i Kredyt, Narodowy Bank Polski, vol. 43(6), pages 7-28.
    7. Anwar, Sajid, 2005. "Variable labour supply, specialisation-based external economies, and capital inflow," International Review of Economics & Finance, Elsevier, vol. 14(4), pages 427-437.
    8. Eckel, Carsten, 2003. "Does globalization lead to specialization?," Center for European, Governance and Economic Development Research Discussion Papers 20, University of Goettingen, Department of Economics.
    9. Haiwen Zhou, 2014. "Intermediate Inputs and External Economies," Frontiers of Economics in China, Higher Education Press, vol. 9(2), pages 216-239, June.
    10. M. Scott Taylor & Juan Moreno Cruz, "undated". "Back to the Future of Green Powered Economies," Working Papers 2014-69, Department of Economics, University of Calgary, revised 29 Sep 2014.
    11. Sajid Anwar, 2001. "Commercial policy and international factor mobility in the presence of monopolistic competition," Journal of Economics, Springer, vol. 74(3), pages 259-281, October.
    12. Eckel, Carsten, 2008. "Globalization and specialization," Journal of International Economics, Elsevier, vol. 75(1), pages 219-228, May.
    13. repec:clg:wpaper:2013-13 is not listed on IDEAS
    14. Anwar, Sajid, 2001. "Government spending on public infrastructure, prices, production and international trade," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(1), pages 19-31.
    15. repec:got:cegedp:20 is not listed on IDEAS
    16. Anwar, Sajid, 2006. "Provision of public infrastructure, foreign investment and welfare in the presence of specialisation-based external economies," Economic Modelling, Elsevier, vol. 23(1), pages 142-156, January.
    17. repec:clg:wpaper:2013-19 is not listed on IDEAS
    18. Francois, Joseph & Grier, Kevin Blaine & Nelson, Douglas, 2004. "Globalization, Roundaboutness and Relative Wages," CEPR Discussion Papers 4406, C.E.P.R. Discussion Papers.
    19. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE.
    20. Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Technological linkages, market structure, and production policies," Journal of Public Economics, Elsevier, vol. 61(1), pages 73-86, July.
    21. Oscar Bajo-Rubio & Antonio G. Gómez-Plana, 2004. "Reducing Social Contributions for Unskilled Labor as a Way of Fighting Unemployment: An Empirical Evaluation for the Case of Spain," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(2), pages 160-160, August.
    22. C J Krizan, 1997. "An Applied General Equilibrium Model Of Moroccan Trade Liberalization Featuring External Economies," Working Papers 97-16, Center for Economic Studies, U.S. Census Bureau.
    23. Francois, Joseph & Nelson, Doug R, 2000. "Victims of Progress: Economic Integration, Specialization and Wages for Unskilled Labour," CEPR Discussion Papers 2527, C.E.P.R. Discussion Papers.
    24. repec:clg:wpaper:2013-06 is not listed on IDEAS

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