This monograph resurrects the spirit of classical economic thinking on network effects of division of labor and general equilibrium mechanisms that simultaneously determine the interdependent benefits of specialization and the number of participants in the network of division of labor (extent of the market) in a modern body of inframarginal economics. Inframarginal economics applies inframarginal analysis (nonclassical mathematical programming which allows corner solution) to studies of network effects of division of labor, individuals' networking decisions in choosing their levels of specialization, mechanisms that endogenously determine the network size and pattern of division of labor, increasing returns, and the relationship between transaction costs, evolution in institutions, property rights, contracts, organization, and the network size and pattern of division of labor. Here, inframarginal analysis is total cost-benefit analysis across different network patterns of trade and division of labor in addition to marginal analysis of resource allocation for a given pattern of organization. It provides an overarching framework that encompasses many areas of the discipline that have customarily been treated as separate branches. These include microeconomics, macroeconomics, development economics, international economics, urban economics, growth theory, industrial organization, applications of game theory in economics, economics of property rights, economics of transaction costs, economics of institutions and contracts, economics of organization, managerial economics, theory of hierarchy, new theory of the firm, theory of money, theory of insurance, theory of the network and reliability, and so on.
Ch. 1 Introduction 1
Pt. I Basic models in inframarginal economics 31
Ch. 2 Consumer-producer's decisions to choose the optimum level and pattern of specialization 31
Ch. 3 Smithian general equilibrium and its welfare implications 59
Ch. 4 More general Smithian models 91
Ch. 5 Trade pattern and professional middlemen 111
Pt. II The institution of the firm and pricing through bargaining and contracting 135
Ch. 6 The labor market and the institution of the firm 135
Ch. 7 Pricing mechanism based on bargaining 171
Ch. 8 Endogenous transaction costs and theory of contract, ownership, and residual rights 205
Pt. III Inframarginal analysis of trade and globalization 237
Ch. 9 Emergence of international trade from domestic trade and emergence of new products 237
Ch. 10 Exogenous comparative advantages in technology and endowment, division of labor, and trade 283
Ch. 11 Inframarginal analysis of coexistence of endogenous and exogenous comparative advantage 329
Pt. IV Urbanization, population, and the trade off between working and leisure 351
Ch. 12 Urbanization, dual structure between urban and rural areas, and the division of labor 351
Ch. 13 The trade off between working and leisure, and the effects of resource scarcity and population size on the division of labor 391
Ch. 14 Economics of property rights and insurance and risk of coordination failure of the network of division of labor 411
Pt. V Hierarchical structure of division of labor 465
Ch. 15 The divisions of labor in roundabout production and emergence of new machines and related new technology
