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Title:
A von Nuemann critique of the Kremer-Maskin model of globalization and inequality |
Abstract:
Kremer and Maskin (1996, 2003) have extended the O-rings theory of production (Kremer [1993]) and have applied it to a model of cross-border production yielding the important result that globalization (the opportunity to employ workers located in multiple countries) can lead to both an increase in global production and to increased income inequality across countries.
This paper, inspired by von Neumann’s theory of systems reliability (von Neumann [1956]), shows that both Kremer’s original theory and the Kremer-Maskin extension posit equilibria that are sub-optimal under a wide range of circumstances. The key message of the paper is that microeconomists should pay more attention to the optimal organization of resources as opposed to optimal allocation.
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Biography:
Dr Manfredi La Manna is a Reader in Economics in the Business School at the
University of St Andrews (founded in 1413, the third oldest University in the
English-speaking world).
He graduated in Economics (summa cum laude) at the University of Siena (Italy) and
obtained his Master’s and PhD in Economics at the London School of Economics.
His main research interests lie in the economic theory of industrial organization
especially innovation, R&D, patents, and optimal organization. He has published
articles in top-ranked journals including the American Economic Review, Economic
Journal, International Journal of Industrial Organization, BE Journal of Theoretical
Economics (Advances), Economics Letters, European Economic Review and others. He is
also a world-leading advocate for and researcher in Open Access and a signatory of
the Budapest Open Access Initiative.
He has given lectures and presentations in the USA, Canada, Europe, India, Qatar,
Armenia, Georgia, etc.
For more details please visit his website www.manfredilamanna.weebly.com.
He is particularly interested in forging research and teaching links with Chinese
economists and economics departments.
He can be contacted at mlm@st-andrews.ac.uk .
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