Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/270893 
Year of Publication: 
2023
Series/Report no.: 
GLO Discussion Paper No. 1264
Publisher: 
Global Labor Organization (GLO), Essen
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.
Subjects: 
Digitalisation
Selling
Output
Profit
Growth
JEL: 
D0
D23
D24
D3
O14
O40
Document Type: 
Working Paper

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