Incomplete Contingent Labor Contract, Asymmetric Residual Rights and Authority, and the Theory of the Firm

In the paper the trade-offs among endogenous transaction costs caused by two-sided moral hazard, exogenous monitoring cost, and economies of specialization are specified in a Grossman, Hart and Moore (GHM) model to absorb Maskin and Tirole’s recent critique and Holmstrom and Milgrom’s criticism of the model of incomplete contract. The extended GHM model allowing incomplete contingent labor contract as well complete contingent contract of goods trade is used to explore the implications of structure of ownership and residual rights for the equilibrium network size of division of labor and productivity.theory of the firm, incomplete labor contract, asymmetric authority, two-sided moral hazard, transaction cost, asymmetric residual rights, division of labor, specialization

The Division of Labor, Investment, and Capital

This paper uses a dynamic general equilibrium model based on corner solutions to formalize the classical theory of investment and capital which considers investment to be a vehicle for developing a high level of division of labor in roundabout productive activities. If it takes time for a specialist producer of tractors to learn the right method in producing commercially viable tractors, specialization in producing tractors is infeasible in the absence of investment in terms of consumption goods which are consumed by the specialist producer of tractor before he can sell tractors. If specialized learning by doing can speed up accumulation of professional knowledge so that roundabout productive machines becomes cheap, such investment for increasing the level of division of labor in roundabout productive activities will speed up economic growth. Due to the tradeoff between economies of specialized learning by doing and transaction costs, the model can be used to investigate the effects of a change in the transaction cost coefficient, which can be affected by policy, the legal system, and urbanization, on the evolution of division of labor, on real interest rates, and on saving rate.Criticism of investment fundamentalism, criticism of technology fundamentalism, Smithian model of investment, Smithian growth mechanism, evolution in division of labor

Thurston's sphere packings on 3-dimensional manifolds, I

Thurston's sphere packing on a 3-dimensional manifold is a generalization of Thusrton's circle packing on a surface, the rigidity of which has been open for many years. In this paper, we prove that Thurston's Euclidean sphere packing is locally determined by combinatorial scalar curvature up to scaling, which generalizes Cooper-Rivin-Glickenstein's local rigidity for tangential sphere packing on 3-dimensional manifolds. We also prove the infinitesimal rigidity that Thurston's Euclidean sphere packing can not be deformed (except by scaling) while keeping the combinatorial Ricci curvature fixed.Comment: Arguments are simplife

Thermodynamical stability for perfect fluid

According to maximum entropy principle, it has been proved that the gravitational field equations could be derived by the extrema of total entropy for perfect fluid, which implies that thermodynamic relations contain information of gravity. In this manuscript, we obtain a criterion for thermodynamical stability of an adiabatic, self-gravitating perfect fluid system by the second variation of total entropy. We show, for Einstein's gravity with spherical symmetry spacetime, that the criterion is consistent with that for dynamical stability derived by Chandrasekhar and Wald. We also find that the criterion could be applied to cases without spherical symmetry, or under general perturbations. The result further establishes the connection between thermodynamics and gravity.Comment: 10 page

International Trade and Income Distribution

This paper applies the inframarginal analysis, which is a combination of marginal and total cost-benefit analysis, to investigate the relationship between division of labor, the extent of the market, productivity, and inequality of income distribution. The model with transaction costs and exogenous and endogenous comparative advantages shows that as transaction conditions are improved, the general equilibrium discontinuously jumps from autarky to partial division of labor with a dual structure, then to the complete division of labor where dual structure disappears. In this process different groups of individuals with different transaction conditions get involved in a certain level of division of labor at different stages of development. As the leading group gets involved in a higher level of division of level, leaving others behind dual structure emerges and inequality increases. As latecomers catch up dual structure disappears and inequality declines. When the leader goes to an even higher level of specialization, dual structure occurs and inequality increases again. Inequality decreases again as the latecomers catch up. Hence, the equilibrium degree of inequality fluctuates in this development process. The relationship between inequality and productivity is neither monotonically positive nor monotonically negative. It might not be of inverted U-curve. The key driving force of economic development and trade is improvement in transaction conditions.Income distribution, division of labor, dual structure, economic development