Implications of taxation on specialisation, and introducing joint production to mesoeconomics

This thesis consists of two parts. We investigate implications of taxation on economic structure, and develop a model for the analysis of joint production in an industry characterised by imperfect competition.

Part 1 is titled "New Classical Economics and Taxation". We extend the analysis of New Classical Economics by explicitly deriving (through numerical simulations), the level of transaction efficiency required for the emergence of division of labour, under alternative combinations of taxes. Chapter 2 provides an introduction to the framework by providing a historical overview of the focus of classical and neoclassical economics, and their relationship with New Classical Economics. Chapter 3 introduces advalorem taxes to a simple New Classical model, and numerically derives 'threshold levels of transaction efficiency'. Implications for economic analysis are then discussed.

Part 2 is titled "Introducing joint production to Mesoeconomics". Chapter 4 firstly presents a historical overview of economic literature on microfoundations of macroeconomics, which provides an appreciation of the context in which Ng's Mesoeconomics was developed. We then discuss the mesoeconomic framework. This is furthered with the presentation of a prototype mesoeconomic model. In Chapter 5, we extend the mesoeconomic framework by developing a short run model of an industry characterised by joint production, and deriving the associated comparative static results. The components of the comparative static equations are interpreted and signed in chapter 6. We then adopt a simplifying assumption to show how to increase the tractability of the derived model. Part 2 ends with concluding remarks.