DIVISION OF LABOUR, SPECIALIZATION, AND THEFT BEHAVIOR â A GENERAL EQUILIBRIUM ANALYSIS OF "HOBBES' JUNGLE"
This paper develops a general equilibrium model with endogenous specialization and endogenous theft behavior to investigate effects of theft on the equilibrium network size of division of labour, on aggregate productivity, and on per capita real income. If an individual can steal from her neighbors or her trade partners, then an increase in transportation efficiency or a decrease in stealing efficiency will increase the level of division of labour where each individual's resources allocated to theft may be either lower or higher than in autarky. This shows the conventional wisdom that "wealth reduces the desire for stealing and poverty stimulates theft" is not always consistent with a sophisticated general equilibrium analysis of interdependence between per capita real income and equilibrium levels of division of labour and stealing activity. An increase in transportation efficiency and/or a decrease in stealing efficiency will raise the equilibrium level of division of labour, thereby enlarging the extent of the market, and increase aggregate productivity and per capita real income.
Division of labour, property rights, specialization, Hobbes' jungle
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