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Pro-competitive effect, division of labor, and firm productivity

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  • Kamei, Keita

Abstract

This study constructs a general oligopolistic equilibrium model in which Smith’s (1776) famous theory of the division of labor under vertical specialization is embedded. We demonstrate that a pro-competitive government policy weakens the division of labor and hence reduces firm productivity, total output, and aggregate welfare. In addition, the policy promotes an increase in workers’ welfare and a decrease in firm owners’ welfare.

Suggested Citation

  • Kamei, Keita, 2014. "Pro-competitive effect, division of labor, and firm productivity," Economics Letters, Elsevier, vol. 124(1), pages 132-135.
  • Handle: RePEc:eee:ecolet:v:124:y:2014:i:1:p:132-135
    DOI: 10.1016/j.econlet.2014.05.001
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    References listed on IDEAS

    as
    1. Chaney, Thomas & Ossa, Ralph, 2013. "Market size, division of labor, and firm productivity," Journal of International Economics, Elsevier, vol. 90(1), pages 177-180.
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Udo Kreickemeier & Frode Meland, 2017. "Non-Traded Goods, Globalization, and Union Influence," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 7, pages 173-201 World Scientific Publishing Co. Pte. Ltd..
    4. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    5. repec:wsi:wschap:9789813224919_0006 is not listed on IDEAS
    6. Avinash K. Dixit & Gene M. Grossman, 1982. "Trade and Protection with Multistage Production," Review of Economic Studies, Oxford University Press, vol. 49(4), pages 583-594.
    7. Kamei, Keita, 2013. "Trade Liberalization, Division of Labor, and Firm Productivity," MPRA Paper 50301, University Library of Munich, Germany.
    8. J. Peter Neary, 2002. "The road less travelled : oligopoly and competition policy in general equilibrium," Working Papers 200222, School of Economics, University College Dublin.
    9. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    10. Paulo Bastos & Udo Kreickemeier, 2017. "Unions, Competition, and International Trade in General Equilibrium," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 6, pages 143-172 World Scientific Publishing Co. Pte. Ltd..
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    Citations

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    Cited by:

    1. Kamei, Keita, 2014. "International Trade, Unemployment, and Firm Owners in a General Equilibrium with Oligopoly," MPRA Paper 59388, University Library of Munich, Germany.
    2. Kenji Fujiwara & Keita Kamei, 2018. "Trade liberalization, division of labor and welfare under oligopoly," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(1), pages 91-101, January.
    3. Shintaku, Koji, 2015. "Change in Fixed Costs and the Division of Labor within Firms through Labor Reallocation," MPRA Paper 62644, University Library of Munich, Germany.
    4. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    5. Kenji Fujiwara, 2018. "Trade, Productivity and Welfare when Monopolistic Competition and Oligopoly Coexist," Discussion Paper Series 170, School of Economics, Kwansei Gakuin University, revised Jan 2018.
    6. Kenji Fujiwara & Keita Kamei, 2016. "Competition Policy at the Intensive and Extensive Margins in General Equilibrium," KIER Working Papers 954, Kyoto University, Institute of Economic Research.

    More about this item

    Keywords

    Division of labor; Cournot competition; General oligopolistic equilibrium (GOLE); Pro-competitive government policy;

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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