10.4225/03/5937475d1c1bc
Sun, Guang-Zhen
Guang-Zhen
Sun
Knowledge, Specialization, Consumption Variety and Trade Dependence
Monash University
2017
knowledge
CES utility function
2003
consumption variety
specialization and division of labor
trade dependence
monash:2221
1959.1/2221
transaction costs
2017-06-07 00:22:51
Journal contribution
https://bridges.monash.edu/articles/journal_contribution/Knowledge_Specialization_Consumption_Variety_and_Trade_Dependence/5084581
This paper provides an analysis of how the development in knowledge results in expanding the consumption variety via promoting specialization and trade dependence. Gains from specialization and trade are reaped with increasing costs for transacting and with increasing interdependence among agents. As such, consumption variety, specialization, transaction costs (in both absolute magnitude and percentage of the total output of the economy), and trade dependence all evolve. Some preliminary empirical evidence consistent with our theory is also presented.