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A Hybrid Mode of Production, Transaction, and Economic Growth: Implication of Digitalization

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  • Mandal, Biswajit
  • Roy Chakraborty, Labani
  • Sanyal, Alapan

Abstract

This essay attempts to build a simple theoretical model of optimization to decipher the effect of digitalization of a part of the entire production structure which we call here trading or transaction or marketing. In the basic model we use traditional Cobb -Douglas production function to argue that a shift from offline to online may induce increase in profit and subsequent economic growth. However, the effects are not uniform implying that factor-input ratio or factor-intensity of the trading activity has a role to play in this context. We also find that night time utilization due to digitalization further strengthens our results. We then extend the basic model for a CES production function. And it has been observed there that in CES – case we have similar results but the channels are a little different for that both revenue and cost have similar consequences of digitalization. Nevertheless, the essence of the basic results holds true even in a more generalized case.

Suggested Citation

  • Mandal, Biswajit & Roy Chakraborty, Labani & Sanyal, Alapan, 2023. "A Hybrid Mode of Production, Transaction, and Economic Growth: Implication of Digitalization," MPRA Paper 116960, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116960
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    References listed on IDEAS

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    More about this item

    Keywords

    Digitalization; Selling; Output; Profit; Growth;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D3 - Microeconomics - - Distribution
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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