杨小凯学术成就(英文)

　　Contributions of Xiaokai Yang to Economics

　　Some of Dr. Xiaokai Yang's contributions to economics have been recognized by referees, reviews, and assessment reports of his publications and research projects. The others are in the form of working papers. This report shall use the citations and referee reports to assess the first class of contributions as m uch as possible. When the assessment is incomplete or the second class of contributions are concerned this report shall provide additional information.

　　(1) Contributions to the literature on specialization and division of labour. The contributions are summarized in Yang and S. Ng: "Specialization and Division of Labor: a Survey," in Ken Arrow, et al eds., Increasing Returns and Economic Analysis, London, Macmillan, 1998. As indicated in the comments from James Buchanan: "The paper is very important. The paper will be very informative to economists, regardless of their particular interests. ...The theme concerning the difference between economies of scale and specialization of labor gives a new slant to a lot of the literature, and especially as the authors relate this to Marshall's influence in getting economists off the Smithean track." (see Ken Arrow, et al, 1998). Another referee of the paper (see Jeff Borland in K. Arrow, et al, 1998) indicates: "The paper is dividedotnithree main sections. The first part reviews research on specialization from the time of Adam Smith through to the publication of Samuelson's economic principles' text (1948). The second part provides a brief overview of models of specialization which derive from neoclassical trade theory or are part of what has come to be known as the 'new' trade or growth theory. The key identifying characteristic of these models is that changes in the division of labour are represented through changes in the number of goods in the economy. In the third part of the paper an extensive introduction to a new class of models of specialization - of which Xiaokai Yang has been one of the pioneers - is presented. The distinguishing feature of this type of model is that changes in the division of labour are represented both in the number of goods in the economy and in individuals' level of specialization in production activities. Perhaps the best test of a survey is to ask - after reading it - whether there is a sufficiently substantial literature to warrant a survey. To both these questions the answer after reading Yang and Ng's paper would have to be resoundingly in the positive. The range of issueserehwspecialization appears to be relevant does not make it hard to accept Houthakker's (1956, p. 182) assertion that 'there is hardly any part of economics that would not be advanced by a further analysis of specialization'." In a reference letter, Nobel Laureate, James Buchanan states that "I can say, without equivocation, that Dr. Yang's depth of understanding, and hence his contribution, to this research area of emerging importance is superior [emphasis original] to that of others in the field (e.g. Paul Krugman, Paul Romer, Robert Lucas)" [quoted from Professor Yew-Kwang Ng's application for a large ARC grant, in 1999].

　　An assessor of Australian Research Council Large Research Grant (A79602713) with Xiaokai Yang, Yew-Kwang Ng, and Heling Shi as the principal investigators states "the investigators have begun to develop a new way of modelling microeconomic behaviour, as reported in published papers and a monograph, at a high level of rigour and with very interesting results." The assessors of another ARC Large Research Grant proposed by Yang and Ng state "This is an excellent and well-planned proposal that has the potential to make a substantial contribution to the international literature. Both chief investigators have already established a substantial track record in this line of research. Their work in this area has established an international reputation at the frontier of research on this topic. This includes substantial progress using previous ARC Large Grant support. They have also received international acclaim for their research from such well-known economists as: Sherwin Rosen, Fischer Black, Donald Smythe, Avner Ben-Ner, and Jeff Borland." "Yang and Ng are at the international forefront of this line of research. Their impressive record of publication in high quality international journals over the past five years is testament to their extremely high productivity and their growing international reputation. Together they have all the requisite technical skills to carry out the project successfully. The fact that Yang's work on the division of labour has not been published of late (since several papers in the Journal of Political Economy and American Economic Review in the early 1990s) in the very top echelon of international journals is indicative of the fact that this research program has not yet received widespread mainstream acceptance. This research proposal could well help to make that breakthrough in establishing an Australian-based new school of economic thought."

　　Dr. Yang's contributions to the literature are also confirmed by comments and reviews on Yang and Ng's book Specialization and Economic Organization, a New Classical Microeconomic Framework, North-Holland, 1993. Sherwin Rosen regards the book as "First rate" (see a report of Professor A. Sinclair). Nobel prize nominee Fischer Black regarded the book as "a brilliant book" (see Black's letter to Ng and Yang). He stated (pp. 255-56, Exploring General Equilibrium, 1995): "Yang and Ng (1993) model growth as a process of increasing specialization through learning about efficient ways to organize production and about specific production processes. Specialization and roundabout production add to production efficiency by increasing transportation and bargaining costs. Comparative advantage is acquired, and it works between countries and within countries in the same way. Firms increase efficiency by reducing transaction costs. Contracting costs imply an optimal degree of vagueness in property rights; even many 'externalities' are endogenous and optimal. Money and credit are essential after specialization reaches a certain point, but do not affect the evolution of the real economy. Even business cycles and unemployment are endogenous and optimal. All this is consistent with a general equilibrium approach to growth and business cycles …"

　　Professor Donald Smythe in his review on the book (Journal of Economic Literature, 1994, Vol. 32, pp. 691-92) states: "This is an ambitious book. Although its authors claim their objective is merely to increase the variety of microeconomic frameworks, it ranges across topics in trade and growth, urban economics, comparative systems, industrial organization, and even macroeconomics. It argues for a complete reorientation of microeconomics away from problems of resource allocation toward problems of economic organization. … This is an interesting and original book. Its motivation is sound, and its fundamental insights are compelling. Professors Yang and Ng have provided us with a refreshing new approach to microeconomics, one that has the potential to address many issues that have long resisted formal treatments."

　　Professor Avner Ben-Ner in his review on the book (see Journal of Institutional and Theoretical Economics, 1995, Vol. 151, pp. 571-72) states: "This book represents a veritable technical and intellectual tour de force. Working their way up from a limited set of assumptions, the authors seek to provide a theoretical explanation for many economic phenomena; from the endogenous emergence of firms, to urbanization, to patterns of international trade, to the emergence of money, to the evolution of property rights, to transition in former communist countries, and much more. In addition, the authors attempt to test empirically some aspects of this theory. The book accomplishes many of these ambitious goals.... Readers will benefit from reading this book because it deals competently and in novel ways with core issues of economic organization. The authors model skilfully situations that other economists have found untractable, and show some of the best uses for economic theory."

　　A referee report for American Economic Review states: "The author develops the concepts of competitive equilibrium and Pareto optimum in relation, not to resource allocation within a market structure, but to the development of market structures. This paper contains a number of good ideas. The analysis leading up to the propositions is interesting and shows considerable originality." An assessor of the Australian Research Council Large Research Project of Ng and Yang states "In a period when the entire paradigm of the discipline is undergoing rapid change, he (Yang) is in the thick of that reshaping."

　　In contrast to some referees' view that the implication of transaction efficiency for the division of labor is a tautology, a referee for Journal of Political Economy states: "The authors observe that increased transaction efficiency (lower costs per unit traded) can actually result in higher total transaction costs, since production becomes more specialized. Of course these higher costs are outweighed by the increased production efficiency. This is worth emphasizing, since it contrasts with the literature that emphasizes the reduction in resources used in transacting associated with 'introducing money'. In fact, a short numerical illustration of the levels of per capital utility and total transaction costs attained for specific production function parameters and various levels of transaction efficiency could emphasize this central theme: that the main gains from monetization come not from reduction in resources spent on transacting, but rather come from the more efficient structure of production that is induced."

　　Four anonymous referees' assessment reports on book Economics of Xiaokai Yang, published by Blackwell, also highly regard his contributions to the literature (the reports respond to the questions raised by the publisher). (I) "The proposed book is systematic, driven by a concept and idea, which Yang pushes through many areas of economics. The book is original, which may also be an obstacle to market penetration. I would take the risk of publishing the book." (II) "I am familiar with Yang's work and, in fact, am a great fan of his. I think he is onto something important, and is doing a nice job of classifying and specifying the foundation for a new pedagogical way of thinking about economics. I would love it if it would become builtotnithe way we teach. The strength of the work is its intellectual quality, its breadth, its connection of current ideas with those in the history of thought, and its logical organization. It is truly impressive. There are no comparable book. He is establishing a whole new field. Yes, I do foresee a growing interest in new classical economics - I think it may well be the wave of the future." (III) "This is an interesting book which I enjoyed reading. It carries the message that the 'new classical economics' is a better description of our environment than the neoclassical economics. The arguments are presented clearly, persuasively and in an interesting way. I would recommend this book to any good economics library and, no doubt, it will be acquired by many economists and economics teachers. (By the way, the chapters that you sent me are almost all from the first half of the book and I would like to also enjoy the second half of the book including the bibliography). In short, the book is quite revolutionary and has a high intellectual quality but even with growing interest in new classical economics I do not foresee its taking off in the near future." (IV) "The book is in some ways a remarkable tour de force. It is almost encyclopedic in its coverage of major economic issues. The passion that Dr. Yang brings to the subject of the 'new classical economics' definitely comes through. I feel that such an overarching point of view lends a greater sense of purpose and unity to the book. While I do not share Dr. Yang's enthusiasm for the new classical school, I do not feel put off by it."

　　Eight anonymous referees' assessment reports on book Development Economics of Jeff Sachs and Xiaokai Yang, published by Blackwell, are very consistent with the reports on Economics. (1) "The proposed text book promises to be an exciting contribution that would offer new and innovative perspective on growth and development. After reading 3 chapters, I would like to offer my enthusiastic support for this project, and to encourage you to publish this book. Enclosed are several reasons for my support. This book covers a void in the graduate text book literature,erehwthere is no book that covers the integration of the transaction cost and property rights with endogenous specialization, increasing returns, and general equilibrium models. The agenda of the book to explain industrialization, urbanization and structural changes using the above framework is both innovative and of great policy importance. It would provide an interpretation for the impact of institutions on economic growth. The book would be the outcome of collaboration of first rate, leading scholars who command the respect of all economists dealing with Economic Development. Based upon on my reading of the chapters, I expect this book to be very well written. Finally, there is a large, mostly untapped market for graduate level text books in Economic Development." (2) "In my judgement this material has definite promise. The focus on the use of general equilibrium models based on optimizing behaviors of the underlying production units with scale economies and attention to institutions within systematic frameworks is definitely promising and does not, to my knowledge, duplicate other graduate textbooks on economic development that are currently available or in process. I find that the illustrative chapters are written clearly as well as systematically, engage the reader by including questions to be asked early on and bygnivahquestions for understanding at the end, and are put wellotnithe perspective of the aggregate/trade literature on developing economies. I expect that there is some tradeoff between the degree of technicality and the size of the potential audience of which the authors are sensitive; the present balance probably limits the potential market primarily to the better graduate programs." (3) "These particular chapters of the book have many features to recommend themselves. The issues of determinants of trade and related policy are analyzed in a fairly sophisticated and modern fashion. The general equilibrium approach with explicit treatment of transactions costs and strategic trade policies is a strong suit of the analysis. Pedagogically too, the book is strong. Could this be used at the graduate level at my school? Conceivably yes. The text is of sufficiently high quality that it could be used as a supplementary text in a Ph.D. level course. Overall, based on the selected chapters that I have had a chance to look at, the book will be a strong contender in a specialized niche in the market." (4) "The authors are to be congratulated for their bold and Herculean effort to move development economics to the mainstream of the profession by an innovative formalization of the Smithian principles of division of labor and specialization, and the results are impressive. In many respects the book is a tour de force, and certainly represents a significant contribution to the literature of development. The methodology utilized and the logic behind the organization of the book are coherent. I believe that the book can have a significant role in a course in development economics. The theoretical apparatus of the present manuscript ingeniously and elegantly links economic growth to mainstream classical Smithian allocative economics, while endogenizing many conceptual issues and development determinants that characterize contemporary emerging economies. I would want my students to be acquainted with the authors' use of general equilibrium analysis and inframarginal analysis, including such innovations as the transaction efficiency variable, to demonstrate the contributions to efficient growth that increased division of labor through market specialization driven by decisions of individual producer-consumers can make. So, I would certainly include parts of the book in a course syllabus." (5) "the book seems to offer an original contribution to comparable textbooks on the topic. First, it seems to offer a throughout analysis of trade (chapters 3 to 7) and macroeconomics (chapters 16 to 19), both of which are not dealt with in depth by comparable textbooks. Second, the chapters are organised along similar lines (inframarginal vs. marginal analysis), which guarantees consistency within a general framework." (6) "The manuscript represents a nice tour of modern economic theory, with applications to many areas of economics. The most outstanding feature of the ms. is its nice theoretical coherence." (7) "The real value of this text is that it brings considerable analytic machinery to bear on important problems. " (8) "This book is a provocative, interesting and promising book that articulates and/or revives more systematically than in earlier literature a number of recently non-conventional views of the aggregate economic development process that relate to specialization through the division of labor, transaction costs, scale economies, inframarginal decisions, within economy-wide (general equilibrium) frameworks. As such, it is a definite contribution, will be an useful addition to the available material for graduate (and perhaps for advanced undergraduate) development courses, and may have a more fundamental effect on how aggregate economic development is considered. "

　　Assessors of Ng and Yang's 2001-2002 ARC large project state "Professors Ng and Yang are pioneers in this field [inframarginal analysis]. They have established an enviable international reputation and many of their publications have been seminal. The project is extremely well motivated. Although theoretical in nature, it has the capacity to shed light on numerous important public policy issues. Coupled with the obvious expertise of the applicants, the likely outcome will be a series of publications of the highest quality. In short, this is an excellent application and should, in my opinion, be supported." "The project is one of importance. The analytical extension of the basic new classical framework of inframarginal analysis to make it more suitable to address issues of welfare economics is well overdue. I agree that if successful such a model would prove useful tool for public policy formulation. While the study is ambitious the authors are well qualified to undertake and successfully complete the project. Both have impressive and relevant backgrounds. They are both prolific in their publication records and so the ARC can be assured they will deliver." "I think the proposed research is of great academic value and, eventually, of great policy value. The authors have shown in their previous work the capability of producing world standard research and I Am confident that this proposal would continue in this vein."

　　Additional information: Dr. Yang and his colleagues have developed inframarginal analysis and general equilibrium models based on corner solutions to resurrect the spirit of classical economic thinking about implications of specialization and division of labor for economic development and the wealth of the nations in a modern body of mathematical formalism. He has proved several important theorems that are essential for tractability of the general equilibrium models based on corner solutions. With the aid of the theorems, individuals' decisions in choosing their levels and patterns of specialization can be formalized. Demand and supply and many other economic phenomena, such as the extent of the market, trade dependence, productivity, endogenous comparative advantage, the emergence of the firm, money, business cycles, hierarchical structure of transactions, and unemployment can be explained as different aspects of the network of division of labor. Dr. Yang's pioneering works will bring the formal analysis of specialization and division of labor back to the core of mainstream economics. The significance of Yang's contributions can be confirmed by Stigler's following statement. Stigler (Journal of Political Economy, 1976, Vol. 84, pp. 1209-1210): "The last of Smith's regrettable failures is one for which he is overwhelmingly famous - the division of labor. How can it be that the famous opening chapters of his book, and the pin factory he gave immortality, can be considered a failure? Are they not cited as often as any passages in all economics? Indeed, over the generations they are. The failure is different: almost no one used or now uses the theory of division of labor, for the excellent reason that there is scarcely such a theory. … there is no standard, operable theory to describe what Smith argued to be the mainspring of economic progress. Smith gave the division of labor an immensely convincing presentation - it seems to me as persuasive a case for the power of specialization today as it appeared to Smith. Yet there is no evidence, so far as I know, of any serious advance in the theory of the subject since his time, and specialization is not an integral part of the modern theory of production, which may well be an explanation for the fact that the modern theory of economies of scale is little more than a set of alternative possibilities."

　　(2) Contributions to the theory of the firm. A AER referee of Yang and Ng's paper "Theory of the Firm and Structure of Residual Rights" (Journal of Economic Behaviour and Organization, Vol. 16, pp. 107-28, 1995) states: "This paper makes a potentially important contribution to our understanding of the functioning of market economy. Despite its simplicity, the model is able to capture a number of the arguments for the existence of firms, including (i) the reduction of transactions costs, (ii) division of labor (increasing returns to specialization), (iii) substituting factor for product markets, (iv) replacing a market for knowledge and managerial intangibles with a market in commodities. The primary achievement of this paper is that it formulates and demonstrates consistency of a model with these characteristics." A QJE referee states: "This paper provides a model in which firms arise through market forces. Its analysis of institutional development is based on two aspects: (1) Coase's idea that firms internalize exchange and thus help avoid transaction costs; and (2) the fine division of labor in the presence of firms. As the introduction states, the importance of this dual aspect has already been emphasized by previous authors. The paper's contribution is to provide a formal model which allows us to analyze (1) the relationship between these two aspects; and (2) the role of a free market in searching for the efficient market structure." A OEP referee of the paper states: "This is an interesting paper. It breaks what I take to be new ground." Another states: "I found this a very interesting paper. It pictures economic development as a changing equilibrium with increasing specialization. The idea is old, but the problem is to find an adequate formal model that will allow something more interesting and substantial than vague conjectures. Yang finds a model that is simple enough to be tractable (with skill),erehwthere are economies of scale for the individuals, and transaction costs. As transaction costs fall, the economies of scale in due course allow people to specialize and trade, although in this model everyone has the same tastes and the same technology is available to all. Labour markets can also emerge." The referees of his paper with Liu "Division of labor, transaction cost, evolution of the firm, and firm size" state: "This paper belongs to a small, but rapidly growing, literature that aims at placing the theory of economic organization in the context of the evolution of the division of labor, using formal methods and choosing a general equilibrium/maximization point of departure. The high point of this literature is arguably Yang and Ng, Specialization and Economic Organization (1993) to which the present paper is clearly related. However, in various respects the present paper extends the reasoning in that book, mainly by explicitly applying the new classical microeconomic framework to a distinct empirical problem - why does average firm size in much of the industrialized world seem to decline although per capita wealth is increasing? - and by extending the general equilibrium model to the three goods case. Given the relatively few pages the paper runs, it is very rich indeed, particularly with respect to the analysis of "configurations" in section III and how the general equilibrium of the model shifts between structures/configurations." "The paper contains a general equilibrium model to analyze the tradeoff between economies of specialization and transaction costs inpuorgto explain decreasing average firm size in some developed countries. As far as I know, the tradeoff that is derived in the model is novel and it is very interesting indeed. The central idea in the paper is: Given the emergence of firms, if transaction efficiency for intermediate goods improves more quickly than that for labor it will be efficient to disintegrate the production of the intermediate goods."

　　Additional information: Borland and Yang ("Specialization, Product Development, Evolution of the Institution of the Firm, and Economic Growth," Journal of Evolutionary Economics, Vol 5, pp. 19-42, 1995) extend the static model of Yang and Ngotnia dynamic general equilibrium model that can predict concurrent endogenous evolution of division of labor and endogenous evolution of the institution of the firm.

　　(3) Contributions to urban economics. A referee of Yang and Rice's paper "An Equilibrium Model Endogenizing the Emergence of a Dual Structure between the Urban and Rural Sectors," Journal of Urban Economics, Vol. 25, pp. 346-68, 1994, states: "Yang and Rice present a nice model which explains the development of cities on the basis of the tradeoff between transactions costs and goods specific increasing returns in production. … I like the basic idea of the paper. As the authors claim, this is the first paper to develop a full model of the emergence of cities due to a reduction in transactions costs, combined with scale economics. Broadly speaking, the economic mechanism of the paper rings true. I also thought that the modeling was neat and that the analysis was well done. The content is excellent. This is a nice paper. If it were better-crafted, it would have a longer half-life and could become a standard reference and a standard reading in graduate courses in urban economics. … Since it is significantly better than the average theory paper published in the Journal, I feel obliged to recommend acceptance subject to correction of only the most glaring problems in the exposition. I congratulate the authors forgnivahdeveloped such a rich model. I hope they continue work along the same line. Perhaps they can extend it to the development of a theory of central places." Another referee states: "The paper presents a general equilibrium model which explains the emergence of urban concentrations as transaction costs of trade decline. The driving force is the economies of scale associated with a division of labor. … The paper is similar in some respects to the recent works of Krugman on the formation of cities while differing in some others. Both are concerned with explaining the emergence of urban concentrations and in both, economies of scale, transport costs, and exogenous immovable rural sector play a key role. However, the two approaches differ from one another in the specification of the economies of scale. In Krugman, these economies are realized within the firm, in Yang and Rice, these economies result from the division of labor."

　　Additional information: Recently, Dr. Yang and his colleagues have developed several general equilibrium models with endogenous land price differential between the urban and rural areas, endogenous transaction efficiency, endogenous specialization, and endogenous productivity. The models can be used to assess the potential for rise of urban land price generated by evolution in the network size of division of labor.

　　(4) Contributions to development economics. The referee of Yang's paper "Development, Structural Changes, and Urbanization," (Journal of Development Economics, Vol. 34, pp. 199-222, 1990) states: "This paper follows an approach that is quite original. The author assumes that increasing returns are present at the level of the individual but that these do not extend to collections of individuals. Thus, for each individual there is a productive advantage to specialization in a single task, but there is no tendency for firms to become arbitrarily large. The resulting equilibrium is essentially one with competition, but with specialization in production. What makes this paper different from papers that simply start from an assignment of workers to different specialized tasks is that the specialization is an endogenous outcome of the model. Thus, it can consider the determinants of the degree of specialization." A AER referee of the paper states: "The author develops the concepts of competitive equilibrium and Pareto optimum in relation, not to resource allocation within a market structure, but to the development of market structures. This paper contains a number of good ideas. The analysis leading up to the propositions is interesting and shows considerable originality."

　　(5) Contributions to endogenous growth theory. Edward Schuh in his Fellow's Address in 1991 Annual Meeting of American Agricultural Economics Association (p. 13) assesses Yang and Borland's paper "A Microeconomic Mechanism for Economic Growth", Journal of Political Economy, Vol. 99, pp. 460-82, 1991 as follows. "Contrary to models which exogenously fix the level of specialization of an individual agent, the Yang-Borland model can explain why an economy evolves from autarky to a state in which there is a highly developed division of labor between individuals in a firm, between firms, and between countries. Moreover, the evolution of the division of labor they examine enlarges the extent of the market, speeds up the accumulation of human capital, and raises trade dependence and endogenous comparative advantage." The referees for Journal of Political Economy state: "This paper develops a model of economic growth and labor specialization that is capable of generating a pattern of evolution from autarky to labor specialization. I found many aspects of the paper innovative." "Understanding the economics of the division of labor is certainly important. This paper presents a structureerehwthis division changes through time. It is a nice feature since we can explore what variables speed or retard the rate at which economies develop. Another interesting feature is that population is held fixed in the model. Division of labor is driven by forces other than population change. In most of the static models of division of labor, population is the key variable." A QJE referee states: "The present paper attempts to model changes in economic organization by highlighting the tension between the dynamic increasing returns attainable with the division of labour and the increased transactions costs that specialized individuals must incur. I find the central theme of the paper interesting and, to the best of my knowledge, original." Another referee for International Economic Review states: "This paper is a promising combination of two different forms of increasing returns. The first, which he labels increasing returns to specialization, is a static effect. The second is a more familiar form of learning by doing. The essence of the argument is as follows. Depending on the parameters of the economy, the static model can lead to different configurations of trade and specialization because of a tradeoff between the gains from specialization and the costs of executing trades in the market. By imposing a form of learning by doing in a dynamic model, the author can consider the possibility of evolution in the structure of the economy, for example from one with autarky, to one with trade between individuals who specialize in different goods."

　　Additional information: A Ph.D. dissertation under Yang's supervision (Wen, 1997, Review of Development Economics, No. 2) extends the Yang-Borland model to endogenize economic growth and concurrent evolution of division of labor and public expenditure on transportation infrastructure. Several papers by other economists (Chu, 1997, and Zhang, 1997, Review of Development Economics), follow the Yang-Borland model to explore the implications of monetary and fiscal policies for evolution of division of labor and endogenous growth.

　　A referee of Ng and Yang's paper "Specialization, Information, and Growth: A Sequential Equilibrium Analysis" (Review of Development Economics, Vol. 1, No. 2, 1997) states: "This paper employs an innovative mechanism called 'Walras sequential equilibrium' to model the dynamics of Yang and Ng's original model on the concurrence of the division of labor and the discontinuously jump of economic structures. The original model is interesting enough and this paper represents another big improvement in this research line."

　　Additional information: The notion of Walrasian sequential equilibrium is an important contribution to formalization of the theory of bounded rationality, evolutionary economics, which analyze concurrent evolution of economic organization and of information about organization, and Austrian notion of entrepreneurial discovery. It can be used to predict evolution of information about the efficient organism in the absence of information asymmetry. In contrast information asymmetry is essential for the evolution of information in Kreps' sequential equilibrium model. A dissertation under Yang's supervision (Zhao, Review of Development Economics, forthcoming, 1999) applies the notion of sequential equilibrium to the study of endogenous emergence of institution of the firm from spontaneous evolution in division of labor.

　　A discussant of Chen, Lin, and Yang's paper "Empirical Evidences for the Endogenous Growth Generated by Evolution in Division of Labor," Discussion Paper, Institute of Economics, Academia Sinica, 1997, states: "The issue is important; the framework of a formal analysis of division of labour focuses on the classical problems of economies of specialization and economic organization largely ignored after the neoclassical marginalism revolution. I find the analysis competent and the evidence persuasive."

　　Additional information: This paper provides strong empirical evidences for the theoretical models that predict endogenous economic growth generated by spontaneous evolution of division of labour.

　　(6) Contributions to international economics. Smythe's review of Yang and Ng's book indicates "The tradeoff between economies of specialization and transaction costs is the recurring theme. And an analysis of how the tradeoff changes as transaction efficiency improves provides the basis for understanding the process of evolution within many of the models. To give some idea of the scope, readers will find, among many other contributions, an endogenous theory of international trade, a formalization of Coase's theory of the firm, and a theory of technological change based on the evolution of the division of labor." Buchanan indicates in his comment on Yang and S. Ng's survey paper (in K. Arrow et al. eds Increasing Returns and Economic Analysis, 1998): "I also like the terms 'endogenous' and 'exogenous comparative advantage', but I know you have developed this already separately. I wish this could be incorporated in textbooks." Yang's paper "Endogenous vs. Exogenous Comparative Advantage and Economies of Specialization vs. Economies of Scale," (Journal of Economics, Vol. 60, pp. 29-54, 1994) is regarded by the referees as "a contribution that appears correct and is worth publishing."

　　The referees of Yang's paper "A New Theory of Demand and Supply and the Emergence of International Trade from Domestic Trade," Pacific Economic Review, Vol. 1, pp. 215-17, 1997 state: "The main contribution of the paper is as follows. It adopts a simple formal model that considers the factors such as transaction costs and learning efficiency in the determination of supply and demand of commodities. This contrasts sharply with traditional (e.g. Marshall's) view on supply-demand. The results obtained also have interesting applications, providing insightful explanations on a number of phenomena (e.g. trading pattern, economic growth) in international trade. It is an interesting paper, and is highly recommended for publication." "Dr. Yang's paper is an interesting extension of the framework introduced in Yang and Borland (1991), which focuses on the tradeoff between two factors associated with specialization: transaction cost and increasing returns to scale. By assuming exogenous transaction cost, the author makes it possible to apply the model to analyze many important economic phenomena such as the effect of trade protection, growth implication of policy to birth control and the Linder-type trading pattern. I find the point especially interesting that the current framework is organization oriented whereas conventional microeconomics is resource allocation oriented." A AER referee of this paper states: "This paper proposes an inframarginal analysis to study a variety of interesting implications of endogenous specialization, in particular the shapes of the supply curves for individual goods. It is found that, among other results, the slopes of the supply curves depend on whether the elasticity of substitution is greater or smaller than one. This is a good contribution to the literature. I find the topic interesting. It appears to me that the paper is well-motivated, clear and free of mathematical errors." Another referee states: "In a broad sense the idea that extensive growth through increasing specialization is captured by the work of the author. This is an excellent research agenda. In this piece the author considers another manner of scale economy, namely the economizing on learning expenses that specialization allows."

　　The referees of Yang and Heijdra's paper "Monopolistic Competition and Optimum Product Diversity", American Economic Review, Vol. 83, pp. 295-301, 1993 state: "The authors make a convincing case that their approach provides different qualitative conclusions than those derived by Dixit and Stiglitz." "Yang and Heijdra's method improves upon the approximation technique of several previous papers. It specifies the conditions in which the price approximation is appropriate."

　　Additional information: Recently, Yang and his colleagues have worked out three papers "An Inframarginal Analysis of the Ricardo Model and Nash bargaining," "An Inframarginal Analysis of the H-O-S Model with Technological Comparative Advantage and Transaction Costs," " Trade Pattern, and Economic Development when Endogenous and Exogenous Comparative Advantage Coexist." The first of the papers has endogenized trade regime and identifies the conditions for coexistence of unilateral protection tariff and unilateral laissez faire regime and for shifts of trade regime from protection tariff to laissez fair or tariff negotiation. In the second of the papers, they have shown that if prices of all goods and factors are endogenized in a general equilibrium Heckscher-Olin (HO) model, the Stolper-Samuelson (SS) theorem and the Rybczynski (RY) theorem may not hold within a certain parameter subspace. Also, they have shown that the HO theorem, the factor price equalization theorem, the SS theorem, and RY theorem may not hold if comparative technological advantages or transaction costs are introduced or if discontinuous jumps of the general equilibrium across corner and interior equilibria are considered. The third paper predicts that a country may export goods with exogenous comparative advantage in production if endogenous comparative advantage dominates this exogenous comparative disadvantage. Also, some ongoing Ph.D dissertations and master theses under Dr. Yang's supervision are extending the three models to explore other aspects of the endogenous trade theory.

　　(7) Contributions to the theory of industrialization. A referee of Heling Shi and Xiaokai Yang's paper "A New Theory of Industrialization" (Journal of Comparative Economics, Vol 20, 171-89, 1995) states: "This paper presents a simple general equilibrium model with economies of specialization and transactions costs. The individual agents make decisions simultaneously as consumers and producers. The model is basically static but it is capable of explaining a wide variety of phenomena associated with the industrialization process. The paper itself is original, provocative, and technically competent." Two QJE referees of the paper state: "This is a very interesting and promising line of research. The use of corner equilibria in conjunction with increasing returns seems to me capture important aspects of the economy." "This paper presents a general equilibrium model to explain several concurrent phenomena in the industrialization process: an increase in productivity, an increase in trade, an increase in the roundaboutness in production, and an increase in division of labor. The most innovative feature of the model is to allow various production configurations. The model is creative and interesting, and the analysis is done very nicely." A AER referee states: "The paper sets up an interesting model in which the presence of increasing returns technologies and various possibilities for how intermediate goods and labor can be used to produce final output yields a model that can speak to the issue of how improvements in transactions technologies can lead to economic development. More importantly, the model explicitly examines how the division of labor changes with development and actually identifies different aspects of the division of labor: the level of specialization of individuals, the degree of diversity of professions, and the degree of 'roundaboutness' in production." An assessor of Australian Research Council Large Research Grant (A79602713) of Yang, Ng, and Shi states "the Yang, Shi and Ng project represents an opportunity for Australian research to lead the world. This project represents an exciting opportunity for research on industrial evolution."

　　(8) Contributions to the theory of hierarchy. Yang and Hogbin's paper "The Optimum Hierarchy", China Economic Review, Vol. 1, pp. 125-40, 1990, develops the first network hierarchy model that can explain the optimum number of layers of a hierarchical structure of cities by the level of division of labor and parameters of transaction conditions, though the model is a central decision model. Shi and Yang's paper "Centralized Hierarchy within Firms and Decentralized Hierarchy in the Market," in Ken Arrow, et al eds., Increasing Returns and Economic Analysis, London, Macmillan, 1998, has developed the first general equilibrium model that endogenizes the dividing line between centralized hierarchies within firms and decentralized hierarchy in the market place and equilibrium network size of division of labor. Yang's paper "An Equilibrium Model of Hierarchy," Seminar Paper, Department of Economics, Monash University, 1996, develops the first general equilibrium model of hierarchical structure of the network of transactions. It explains the number of layers of network hierarchy of transactions and the level of division of labor by a transaction cost coefficient of transaction services provided by professional middlemen. Also, the level of division of labor in providing transaction services is endogenized.

　　(9) Contributions to economics of property rights and transaction costs. A referee of Yang and Wills' paper "A Model Formalizing the Theory of Property Rights", Journal of Comparative Economics, Vol. 14, pp. 177-98, 1990, states: "The accomplishment of this paper is the formal derivation of a relationship between the extent of private property rights and the gains from specialization. Since the days of Adam Smith, economists have argued that specialization in production is welfare enhancing. Other economists have pointed out that specialization is privately profitable only to the degree that property rights are well defined and enforced. The author of this paper shows, in a fairly abstract general equilibrium model, that stronger property rights require a greater expenditure of resources on property right enforcement. These same resources, however, could have been used to produce more goods as a result of economies of specialization. But increased specialization implies more transactions and a greater probability that rights will be violated. Thus, a trade off between property protection and gains from specialization exists. This idea is not new, but this paper is one of the few attempts to model formally the idea. The paper provides a starting point for others on this important topic - the economics of property rights." The referees of chapter 11: The Extent of the Market and Rights Specified in a Contract vs. Rights to Contracting in Yang and Ng's book Specialization and Economic Organization state: "This work explores the important and neglected relationship between the division of labour and the transaction costs involved in delimiting property rights and rights to contracting. I believe this is a very important work." "The work makes a major contribution toward formalizing several informal propositions from the property rights literature. Its model is well conceived and the comparative statics highlight its interesting implications."

　　Professor Avner Ben-Ner in his review on Yang and Ng's book (see Journal of Institutional and Theoretical Economics, 1995) states: "The models developed in this book focus on the relationship between specialization and transaction costs and the associated decisions of individuals regarding what to produce and what to buy. Thus this book by Yang and Ng belongs to the New Institutional Economics, especially to the literature that focuses on transaction costs and the boundaries between firms and markets. These authors' emphasis on specialization gives their framework a unique flavor which distinguishes them from Coase, Williamson and others. The endogenization of the choice of specialization and therefore of what to produce and what to buy sets Yang and Ng apart from much of the industrial organization and organizational economics literature, from which the authors draw many of their modelling techniques."

　　Additional information: Yang and his colleagues' models have formalized the ideas of Coase and other economists of property rights and transaction costs about endogenous degree of externality which balances the trade off between endogenous and exogenous transaction costs and benefit from the division of labor. Compared with other formal models of endogenous externality of Milgrom and others, Yang and his colleagues' models focus on the general equilibrium implications of endogenous externality for the network size of division of labor, while other models of endogenous externality in the literature of organization are partial equilibrium models or decision models.

　　(10) Contributions to the theory of capital. Referees of Yang's paper "The Division of Labor, Capital, Investment, and Saving," forthcoming in Metroeconomica, made the following assessment. "Contrary to 'old' and 'new' neoclassical growth theories, investment in physical and human capital or in the innovation of new products do no automatically increase future productivity 'if the investment were not used to develop the right level and pattern of division of labor'. Yang sets out to formalize the connection between the division of labor and capital as emphasized by Smith (1776) and Young (1928) within a modern intertemporal general equilibrium approach with corner solutions. They, as consumer-producers, choose endogenously between self-production of food (tractors) and buying these goods from specialized producers. Specialization allows productivity enhancing learning by doing but needs saving (investment) in food to provide the means of consumption for the tractor producer. 'Do you think it is a useful project?' Yes, to my mind the author's project is very useful. The author's work alone and in collaboration with others (Borland/Yang 1991, Yang/Ng 1993) is innovative and important. Contrary to the Hicks-Arrow-Debreu version of intermeporal general equilibrium, there is no complete (exogenous) specialization between households and firms but in Yang's approach the consumer-producer is the basic economic unit which chooses - dependent on transaction costs, the economies of specialization and roundaboutness and fixed learning costs of specialized production - the efficient degree of division of labor. 'Does it succeed?' Yes, it does. It enriches in an interesting and substantially important way the range of the core of modern economic theory (optimization and market clearing). Basic classical economic insights such as the dependence of the division of labour on the extent of the market and the reverse (Young, 1928) and the role of savings and capital investment in consumer goods to make possible the specialization on producing learning costs intensive means of production can be reconstructed within a unique theoretical approach. Yang's paper supplies new economic substance in a formally correct and interesting way." "While the model is highly stylized, it is already rich and complex enough. In particular, a considerable number of different cases have to be distinguished, which makes the formal analysis quite tedious. Generally, the author tries to be not too technical and to present the main results in a comprehensible form. He essentially succeeds in this task, though the paper is still no easy reading and requires a careful reader. However, the latter is in the nature of the theoretical approach chosen and on the whole I consider it worth the effort."

　　(11) Contributions to monetary theory. The referees of chapter 17 of Yang and Ng's book Specialization and Economic Organization (1993) state: "In this paper, a model is constructed to capture the relationship between specialization in production and monetary exchange. … If transactions costs are sufficiently large relative to the gains from exploiting economies of scale, then autarky results. However, if transactions costs are low enough, then an equilibrium can be supportederehwmarkets open in sequence, and exchange is supported using credit. I like the idea here very much. Existing explicit treatments of the role of money, for example Kiyotaki and Wright (1989), simply takes specialization as given. There are many interesting coordination issues which could be studied in the context of a modelerehwthere is joint determination of specialization and monetary arrangements." "This paper presents a model within which it is possible to determine endogenously the patterns of production and consumption that is specialization and at the same time to analyze the interaction between specialization and the use of money. This is a very interesting set of questions, that many economists have been discussing and debating for years, and I think it is well worth attempting to provide formal models that bear on these issues. I think that the paper makes a contribution. This model is very different from the model of Borland and Yang, but the questions are closely related." "This paper contributes to the recent literature on the economic factors which give rise to monetary exchange. In particular, it focuses on the importance of the specialization of labor in a multi-stage production process involving both intermediate goods and a final consuption good. The paper develops a model in which all agents are ex ante identical and specialization is endogenous rather than exogenously imposed. This is contrasted with other works which impose specialization. With this, the paper establishes a positive relationship between returns to specialization/transaction efficiency and division of labor. Given partial or full specialization, there will be no 'double coincidence' of supply and demand in bilateral trades. Thus there is a role for commodity and fiat money. In the case of complete division of labor, an enforceable credit system leads to fiat money equilibria and no-enforceability leads to commodity money equilibria. It is also shown that the introduction of fiat money improves productivity and improves transactions efficiency. In solving the model, the authors employ a neoclassical structure in determining number of agents specializing in a particular productive activity and relative prices. They impose both market clearing and utility equilization. This is an innovative methodology which circumvents the more difficult bilateral bargaining problems which persist in search theoretic models of money. This is a timely paper given the current interest in developing explicit microfoundations of money as a medium of exchange. Its primary contribution is not in identifying what factors are important in determining the emergence of money but rather the mechanism by which they provide a role of money. They show that a multi stage production process leads to endogenous specialization and division of labor which then naturally leads to a role for money. Both commodity and fiat money demand are thus linked to fundamentals such as transaction efficiency and economies of specialization through the individuals decision of specialization instead of imposing these decisions exogenously. They also show that one of the factors that determine which commodity will emerge as money depends upon the stage of the good in the production process."

　　Additional information. Dr. Wenli Cheng develops Yang's model of endogenous emergence of money from evolution of division of labor and shows that a sufficiently high level of division of labor is more essential than a sufficiently long roundabout production chain in a model with several consumer goods. Her dissertation contains this model is highly regarded by anonymous examiners.

　　(12) Contributions to the theory of network. A referee of Yang and Chu's paper "How Does the Market Coordinate the Division of Labour and Utilize Network Effects: An Inframarginal Analysis" states: "This paper is a rather bold attempt to provide a general equilibrium model for behavior that is not normally included in economic models. First, it attempts to demonstrate that our typical reliance on marginal analysis is incomplete. Then it attempts to provide a model that incorporates inframarginal analysis and examines the resulting equilibrium. Using the common assumptions of utility maximizing behavior and a Walrasian auctioneer, the author claims that markets can overcome coordination problems that are central to what have been called 'network externalities'. A key point in the analysis, and one that seems correct, is that many important economic decisions are of an 'either/or' nature, and that corner solutions and not interior solutions are the typical result. It is also insightful to realize that the division of labor shares all the characteristics of networks that have been associated with new technologies and network externalities. … The evidence, to the extent we currently understand it, supports the results of this model, and the author needs to raise these points."

　　Additional information: Recently Dr. Yang and his colleagues and Ph.D students have proved several theorems that can be used to identify the conditions under which a general equilibrium network of division of labor exists on the basis of very general specification of a new classical equilibrium model. Also, it is proved that the set of core allocations and the set of equilibria are equivalent if the set of consumer-producers is a continuum for the general model with ex ante differences between individuals. Even some comparative statics results are worked out using the theorems. If the theorems were accepted by peer economists, the contribution of the theorems to new classical economics would be comparable to that of Debrue's existence theorem to neoclassical economics.

　　(13) Contributions to the theory of business cycles and unemployment. A referee of chapter 18 of Yang and Ng's book Specialization and Economic Organization (1993) states "This work presents a dynamic general equilibrium model that can generate business cycles with unemployment. The structure of the economy is such that business cycles with unemployment can result from the actions of utility maximizing agents in the economy. Hence they can be interpreted as an evidence of market success instead of market failure. The paper shows that if the framework with consumer-producers, economies of specialization and transactions costs developed by Yang (1991) and Yang and Borland (1991) is modified to allow for job shifting costs and durable producer goods, then the framework will be able to generate a dynamic equilibrium with business cycles and unemployment. Moreover, this equilibrium will be Pareto superior to that with no unemployment." Another referee states: "The method of computing the equilibrium is innovative. It involves a global comparison of corner solutions instead of a local and marginal approach." The AER referees of this work state: "This work presents a model of endogenous, Pareto efficient business cycles." "The paper looks more similar to new classical real business cycle approaches. However, he argues that they need exogenous shocks to generate cycles, and cites Prescott's view that such fluctuations are not cycles." A JPE referee states: "This is an ambitious paper whose goal is to establish a new theory of cycles. From a less ambitious perspective, the paper studies an environment in which cycles emerge as an equilibrium phenomenon."

　　Additional information: Yang and Ng have developed the first dynamic general equilibrium model that can simultaneously predict the following phenomena: Endogenous, efficient, and long-run business cycles, endogenous, efficient, and long-run cyclical unemployment, endogenous long-run growth. Also, the intimate relationships between the three phenomena and evolution of division of labor in producing roundabout productive durable goods are explored. A Harvard University Ph.D. thesis has developed this model of endogenous and efficient business cycles to the cases with overlapping generations and government policies to credit market. Julan Du's Ph.D. thesis at Harvard University extends this model to the case with three goods and overlapping generations.

　　(14) Contributions to the literature of principal-agent relationship. Yang and Yeh's paper "An Equilibrium Model with Endogenous Principal-agent Relationship," Seminar Paper, Department of Economics, Monash University, 1996, is regarded by a referee as the first general equilibrium model that simultaneously endogenizes individuals' levels of specialization and related principal-agent relationship and moral hazard. This paper, his papers with Lio on moral hazard, insurance, and division of labor, and on endogenous transaction costs and the theory of the firm have successfully absorbed challenge raised by several referees that transaction costs and the network size of division of labour should be simultaneously endogenized.

　　(15) Contributions to the study of transitional economics and the Chinese economy. The referees of Yang, Wang, and Wills' paper "Economic Growth, Commercialization, and Institutional Changes in Rural China, 1979-1987," China Economic Review, Vol. 2, pp. 1-37, 1992, state: "The core contribution of this essay is the attempt to come up with a quantitative measure of the degree of enforcement of property rights in the rural areas of China in the reform period." "I think the paper's topic is very important, interesting and sensible. The model is based on Yang and Wills (1990). The major contribution it made to the field is perhaps, not the model, but the methodology they used to construct a composite index of specifying and enforcing property rights. It is a good paper with originality." "The author justified the use of the model carefully, and developed proper methodologies in measuring the level of division of labor, and constructing a composite index of specifying and enforcing property right. This is a major contribution and provides an useful tool for further investigation of the impact of institutional changes on growth." "The article is interesting and breaks new ground." Dr. Yang's book, with Susan McFadden, Captive Spirits, Oxford University Press, Chinese edition, 1994, English edition, 1997, has been highly regarded by book reviews. Professor Jonathan Unger (Australian National University) states: "Captive Spirits offers a fascinating windowotnihidden aspects of Chinese society and politics - aspects that even China specialists have known very little about. Yang introduces us to worlds within China not previously touched upon by writers. Yang's portrayals reachotnithe hidden heart of the Maoist regime's most vicious side, and the spirits of its victims." Professor Lynn White (Princeton University) states: "Yang depicts these 'Captive Spirits' with all the stolid humor of a Solzhenitsyn and all the social searching of a Djilas. The tales of prisoners, who survive hunger, harassment, failed escapes, and state-organized murder, are enough to capture any reader's heart. These are free spirits."

　　Additional information: Dr. Yang has published many papers and books about China's reforms and about the theories of the firm, property rights, and transaction costs in Chinese. One of them "Modern Economics and Chinese Economy" enters the list of bestseller in China. Those works are very influential on the economic thinking of Chinese economists and policy makers. Some of the papers are published in the leading Chinese journal of economics and have received many citations.