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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 in division of labor and in the information of organization acquired by society. The concurrent evolution generates endogenous growth based on the tradeoff between gains from information about the efficient pattern of division of labor, which can be acquired via experiments with various patterns of division of labor, and experimentation costs, which relate to the costs in discovering prices. The concept of Walras sequential equilibrium is developed to analyze the social learning process which is featured with uncertainties of the direction of the evolution as well as a certain trend of the evolution.

Suggested Citation

  • Yew-Kwang Ng & Xiaokai Yang, 1999. "Specialization, Information, and Growth: A Sequential Equilibrium Analysis," CID Working Papers 07A, Center for International Development at Harvard University.
  • Handle: RePEc:cid:wpfacu:07a
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.

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    More about this item

    Keywords

    coevolution of specialization and information; adaptive decision; bounded rationality; sequential equilibrium; economic development;
    All these keywords.

    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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