Conventional trade theory, which combines the Heckscher-Ohlin theory and the Stolper-Samuelson theorem, implies that expanded trade between developed and developing countries will increase wage inequality in the developed countries. This theory is widely applied. It serves as the basis for...

How do labor markets adjust to trade liberalization? Leading models of intraindustry trade (Krugman (1981), Melitz (2003)) assume homogeneous workers and full employment, and thus predict that all workers win from trade liberalization, a conclusion at odds with the public debate. Our paper...

Yang's theory of economic specialization under increasing returns to scale (Yang, 2001) is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labor. In this theory, specialization — and thus, the social division of labor — is...

In the paper, the concept of Walrasian sequential equilibrium is developed to formalize the notions of fundamental social and endogenous uncertainties and decentralized social learning. It predicts that social sequential experiments with efficient as well as inefficient network patterns of...

No abstract received.

This paper brings order to the vast conceptual and empirical literature on measuring transaction costs. It critically reviews the broad and diverse landscape of the field of transaction costs measurement, ranging from financial economics, Williamsonian transaction cost economics, the transaction...

The transaction cost literature continues to mature as improvements have been made on both theoretical and empirical fronts. Over the past several years, serious attempts have been made to actually measure transaction costs. Here I argue that successful measurement must solve three...

Classical trade theory is based on exogenous comparative advantage. The existence of equilibrium is derived under the assumption that the output sets are (weakly) convex. In general, however, in the presence of transaction costs or in the case of production techniques with increasing returns to...

This paper presents a simple general equilibrium model of economic performance through time. The model incorporates four main determinants of economic performance: technology, capital investment, the division of labor and quality of institutions. It demonstrates that growth is not automatic even...

While the role of division of labour is very important, in itself its scope for promoting economic growth is limited. This scope is tremendously expanded when division of labour is compounded with that of capital accumulation and technical progress and the interaction/reinforcing effects between...