Preface To: Stochastic Demand, Specialization, and Increasing Returns

Division of Labour & Transaction Costs (DLTC): A Journal for the Society of Inframarginal Economics

Posted: 20 Oct 2009 Last revised: 3 May 2010

Date Written: June 1, 2008

Abstract

Adam Smith pointed out that specialization makes individuals more productive through improved dexterity, judgment, and innovation. The theory of increasing returns incorporated in this paper does not depend on the presence of such intra-personal enhancement of productivity. Instead, we note that specialization reduces the costs of meeting stochastic demand that is infrequent and probabilistically uncertain. Specialization characterized as coordinating convention clarifies and extends the economic logic in Smith's interpretation of conditions required for economic progress.

Keywords: Specialization, stochastic demand, coordination convention, extent of the market

Suggested Citation

Yoon, Yong J., Preface To: Stochastic Demand, Specialization, and Increasing Returns (June 1, 2008). Division of Labour & Transaction Costs (DLTC): A Journal for the Society of Inframarginal Economics, Available at SSRN: https://ssrn.com/abstract=1490885

Yong J. Yoon (Contact Author)

George Mason University ( email )

Fairfax, VA 22030
United States
703-993-2332 (Phone)
703-993-2334 (Fax)

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