Economic (dis)integration in the presence of evolutionary learning

Cem Karayalcin, Diego Mendez-Carbajo and Devashish Mitra ()

Journal of Evolutionary Economics, 2004, vol. 14, issue 4, 463-481

Abstract: We use a two-factor, two-sector model to study the effects of economic integration and its reversal in the presence of input-generated external economies in one of the sectors. The equilibrium selection problem that arises is solved by applying a simple trial-and-error learning rule. Economic integration can take individual economies ridden with coordination failures to better equilibria, i.e., can solve the coordination problem. We show that integration (and disintegration) may generate cycles in wages, rentals and the sectoral allocation of factors. Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Economic (dis)integration; Input-generated externalities; Coordination failures; Learning rule; Simulation (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s00191-004-0219-7

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