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The Effect of Taxation, Specialization, and Entrepreneurial Activities on International Trading

In: Trade and Global Market

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  • Er'El Granot

Abstract

In this chapter, a generalization of the Ricardian model of international trading is presented. Unlike the original Ricardian analysis, the presented model takes into account the producers entrepreneurial activities, their specialization factor (the improvement factor in production due to specialization) and the countries taxes (tariffs). The main result of this model is that for a given entrepreneurial activity culture and a given specialization factor, there exists a critical taxation level, above which specialization and all entrepreneurial activities are suppressed and international commerce is ceased. The transition from a working international market to a trade-less one is an abrupt one and resembles a phase transition.

Suggested Citation

  • Er'El Granot, 2018. "The Effect of Taxation, Specialization, and Entrepreneurial Activities on International Trading," Chapters, in: Vito Bobek (ed.), Trade and Global Market, IntechOpen.
    • Handle: RePEc:ito:pchaps:146910
    DOI: 10.5772/intechopen.74751
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    File URL: https://www.intechopen.com/chapters/59645
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    More about this item

    Keywords

    entrepreneurship; international trading; specialization; unstable markets; entrepreneurial behavior; entrepreneur; iterative economic processes; Austrian school of economic;
    All these keywords.

    JEL classification:

    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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