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Specialization, Information, and Growth: A Sequential Equilibrium Analysis
Author(s) -
Ng YewKwang,
Yang Xiaokai
Publication year - 1997
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00018
Subject(s) - economics , division of labour , transaction cost , division (mathematics) , process (computing) , microeconomics , endogenous growth theory , computer science , human capital , arithmetic , mathematics , market economy , economic growth , operating system
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.