Division of Labor and Allocation of Property Rights with Transaction Costs
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Abstract:
This paper addresses the question produced when the control over nonhuman resources affect division of labor based on specialization. In a simple economy with two final goods and a nonhuman resource as an initial input of production, it is proved by using the new classical microeconomic method that readjusting the initial allocation of property rights can help push the division development of labor, although the ex post transaction costs will increase. The model shows that it is an improper division of labor that the Government directly involves itself in production by founding state owned enterprises, and these enterprises at least should withdraw from competitive industries.
