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Diversity, Globalisation and Market Stability

Author

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  • Lasselle, Laurence
  • Svizzero, Serge
  • Tisdell, Clement A.

Abstract

Globalisation 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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Suggested Citation

  • 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.
  • Handle: RePEc:ags:uqseet:90501
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    Cited by:

    1. Clem Tisdell, 2004. "Economic Competition and Evolution: Are There Lessons from Ecology?," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 179-193, April.
    2. ., 2013. "Market niches, competition and economic performance: more clues from ecology?," Chapters,in: Competition, Diversity and Economic Performance, chapter 8, pages 160-182 Edward Elgar Publishing.
    3. ., 2013. "Market impediments, restrained reactions and market dynamics," Chapters,in: Competition, Diversity and Economic Performance, chapter 9, pages 183-201 Edward Elgar Publishing.
    4. Laurence Lasselle & Serge Svizzero & Clem Tisdell, 2001. "Heterogeneous Beliefs and Instability," Discussion Paper Series, Department of Economics 200111, Department of Economics, University of St. Andrews.
    5. Tisdell, Clement A. & Alauddin, Mohammad, 2002. "Market-Oriented Reforms in Bangladesh and their Impact on Poverty?," Economic Theory, Applications and Issues Working Papers 90521, University of Queensland, School of Economics.
    6. Tisdell, Clem & Seidl, Irmi, 2004. "Niches and economic competition: implications for economic efficiency, growth and diversity," Structural Change and Economic Dynamics, Elsevier, vol. 15(2), pages 119-135, June.
    7. Tisdell, Clement A. & Svizzero, Serge, 2003. "Globalization, Social Welfare and Labor Market Inequalities," Economic Theory, Applications and Issues Working Papers 90525, University of Queensland, School of Economics.

    More about this item

    Keywords

    Diversity; Globalisation; Heterogeneity of Behaviour; Instability; Environmental Economics and Policy; Financial Economics;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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