The dynamics of bilateral exchange and division of labor
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.
dynamics bilateral exchange division of labor production consumption price mechanism axiomatic foundations differential equations instrumental learning operant conditioning