The paper introduces differences in production and transaction conditions between countries into a model of monopolistic competition. It applies inframarginal analysis to show that, as transaction conditions are improved, the general equilibrium may jump discontinuously across different patterns...

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....