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THE DIVISION OF LABOR AND ROUNDABOUT PRODUCTION: ALLYN YOUNG REVISITED
Author(s) -
Sun GuangZhen,
Lio Monchi
Publication year - 2003
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2003.00223.x
Subject(s) - division of labour , economics , roundabout , complementarity (molecular biology) , production (economics) , transaction cost , database transaction , division (mathematics) , labour economics , microeconomics , market economy , engineering , programming language , arithmetic , mathematics , biology , transport engineering , computer science , genetics
. This paper investigates Allyn Young's two important doctrines concerning the division of labor and roundabout production. First, apart from advancing the state of knowledge, the progressive division of labor that can occur within a given population encourages the adoption of more specialized, differentiated intermediate goods in the production process. Second, the level of division of labor and the extent of the market depend on each other. Using a general equilibrium model with increasing returns to specialization, economies of complementarity between intermediate goods, and transaction costs, we demonstrate that the level of division of labor and the number of intermediate goods increase concurrently as transaction conditions are improved.