DP1813 | A geometry of Specialization

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Division of labour models have become a standard analytical tool, along with competitive general equilibrium models (Ricardian, HOS, Ricardo-Viner), in public finance, trade, growth, development and macroeconomics. Yet unlike the earlier models, specialization models lack a canonical representation. This is because they are both new and complex, characterized by multiple equilibria, instability and emergent structural properties under parameter transformation. We develop a general framework for such models, illustrating results from current research on specialization models, and explaining why one sub-class of these models is particularly difficult to illustrate easily.