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THE DYNAMICS OF BILATERAL EXCHANGE AND DIVISION OF LABOR

KJELL HAUSKEN

Faculty of Social Sciences, University of Stavanger, P. O. Box 8002, N-4068 Stavanger, Norway

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and

JOHN F. MOXNES

Department for Protection, Norwegian Defence Research Establishment, P. O. Box 25, 2007 Kjeller, Norway

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https://doi.org/10.1142/S0129183105006978Cited by:1 (Source: Crossref)

Abstract

The article presents a dynamic model of exchange, production, and consumption. In a dynamic world, complicated predictions often have to be made. Thus, in this article, the classical exchange model is expanded with a dynamic model specifying the intermediate states toward a static equilibrium, which may or may not be reached. A price mechanism was necessary to develop in order to describe these changes over time. The model is illustrated with two examples of the emergence of division of labor. The robustness of the dynamic model is tested with sensitivity analysis.

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