A firm’s degree of specialization is modeled as the number of different goods it produces. When a firm chooses its degree of specialization, it faces a tradeoff between the fixed cost and the marginal cost of production. A firm’s degree of specialization is shown to increase with the extent of the market. Meanwhile, the real wage rate, as a measure of the extent of the market, is endogenously determined in the model and is shown to increase with the division of labor. Copyright Springer-Verlag Berlin/Heidelberg 2004Division of labor, Extent of the market, Specialization, Increasing returns to scale.,

"The role of population growth in the process of industrialization is studied in a general equilibrium model. It provides a formal presentation of Rostow's insight of the role of a leading sector in industrialization. Population growth may lead to a shortage of food and a breakdown of the industrialization process. However, population growth may benefit the manufacturing sector in the adoption of increasing returns to scale technologies. Elasticity of demand for agricultural goods plays an important role in determining whether an improvement of agricultural technology or an increase of population is beneficial to the manufacturing sector. A comparison of China and Britain before the Industrial Revolution shows that research and development are necessary for sustained growth. Achieving industrialization independently requires a combination of a sufficiently large market size from the demand side and a sufficiently large supply of technologies from the supply side". ("JEL "O14, E10, N10, Q01) Copyright (c) 2008 Western Economic Association International.

Santa Barbara for helpful comments. Jonathan Alevy, Roel Ikink, Stef van Kessel, Menusch Khadjavi and Michael Price provided excellent research assistance. Furthermore, we would like to thank NWO and the Erasmus Trust Fund for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

This paper studies impacts of factor endowment on international trade in a general equilibrium model in which firms choose their technologies endogenously. Though countries only differ in factor endowment ex ante, countries may also differ in their chosen technologies. If industries choose different capital-labor intensities in equilibrium, the Heckscher-Ohlin theorem, factor price equalization theorem, the Rybczynski theorem, and the Stolper-Samuelson theorem hold. If industries choose the same capital-labor intensity in equilibrium, the volume of trade is zero. None of the four theorems applies.

This paper studies a general equilibrium model of economic geography in which firms engage in oligopolistic competition. This framework is conducive to analytic results. With increasing returns, oligopolistic competition leads to interindustry trade between regions rather than intraindustry trade. The choice of appropriate technology is a channel of concentration of industries. Copyright Blackwell Publishing, Inc. 2007