No Mere Tautology: The Division of Labor is Limited by the Division of Labor

Andrew Smyth and Bart Wilson

Working Papers from Chapman University, Economic Science Institute

Abstract: We explore the intersection of growth theory and the theory of the firm with an experiment. Economic growth is possible in our experiment when agents specialize to exploit increasing returns. We find that low opportunity costs are sufficient for Marshallian internal economies, but that Marshallian external economies are slow to emerge in four probing treatment conditions. Transaction costs do not hamper external economies as we anticipated prior to collecting data. When external economies falter, it is because new ideas about the cost and value of more extensive specialization fail to emerge. Ideas are what make further divisions of the division of labor—and thus economic growth—either possible or impossible.

Keywords: growth theory; theory of the firm; experimental economics; specialization; increasing returns; transaction costs (search for similar items in EconPapers)
JEL-codes: C92 D23 L20 O40 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: No mere tautology: the division of labour is limited by the division of labour (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:17-21

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