Shang Yang is regarded as the chief architect of the Chinese state. This paper interprets the Reforms of Shang Yang from the perspective of economics and analyzes the Reforms in a mathematical model. Shang Yang tried to rationalize government administration and to organize the economy more...

How market size and the level of coordination costs determine the degree of specialization is studied in an infinite horizon model with the amount of capital determined endogenously. Firms producing the same intermediate good engage in oligopolistic competition and choose the degree of...

If institutions are essential for long-run performance, why don’t developing countries adopt institutions in developed countries to become rich? In this dynamic model, culture affects a ruler’s institutional choice, while culture itself evolves endogenously. Multiple stable steady states are...

By studying a two-sector general equilibrium model in which firms engage in oligopolistic competition and unemployment is a result of the existence of efficiency wages, we derive the following results analytically. A country’s comparative advantage in producing manufactured goods increases...

Abstract In this overlapping-generations model, there is unemployment in the manufacturing sector. Manufacturing firms engage in oligopolistic competition and choose technologies to maximize profits. With capital as fixed costs of production, increasing returns in the manufacturing sector exist....

Is the degree of external economies (at the industry level) higher than the degree of internal increasing returns (at the firm level)? If so, what is the exact source of this difference? In this general equilibrium model in which firms producing final goods choose the degree of specialization of...

In this general equilibrium framework, the transportation sector is modeled as a distinct sector with increasing returns. A more advanced technology has a higher fixed cost but a lower marginal cost of production. Even with both manufacturing firms and transportation firms engage in...

The Confucianism school emphasizes family value, moral persuasions, and personal relations. Under Confucianism, there is a free-rider issue in the provision of efforts. Since national officials are chosen through personal relations, they may not be the most capable. The Legalism school...

In ancient China, a ruler needed to handle both internal rebellions and external threats. To decrease the possibility of internal rebellions, a ruler could organize the government to establish the balance of power among ministers. While effective in preventing internal rebellions, this approach...

This paper employs a historical approach to address whether a country can avoid the middle-income trap. The development of the manufacturing sector and technological capacities are important for a country to avoid the middle-income trap. South Korea avoided the middle-income trap through...