O Ring Model Economics

Michael kremer s nobel prize with duflo and banerjee reminded me of his important paper the o ring theory of development.

O ring model economics. Within firm or across name of theory. By alex tabarrok october 15 2019 at 5 36 pm in economics. The latest issue of the journal of economic behavior and organization has a new paper by garett jones ungated version here on the o ring theory of economic development. Its been floating around as a working paper for a few years so its nice to see it get a home.

The o ring theory 553 i. This was from our. October 29 2019 at 4 16 am kremer m 1993a the o ring theory of economic development quarterly journal of economics 108 3. The o ring that cost less than 1 which caused the challenger shuttle crash.

For example in an automobile factory one task might be installing the brakes and in a restaurant one task might be waiting on tables. I also rewatched my video on this paper from tyler s and my online class development economics. The o ring model of development. The key feature of this model is positive assortative matching whereby people with similar skill levels work together.

Kremer s o ring model basic idea. The o ring theory of economic development is a model of economic development put forward by michael kremer in 1993 which proposes that tasks of production must be executed proficiently together in order for any of them to be of high value. But before i post about that paper i thought. In his model a product may founder from the mistake of a.

The o ring production function consider a firm using a production process consisting of n tasks. Using this as a leading example kremer 1993 studies production processes in which the value of output may dramatically decrease due to the failure of a single task. The o ring production function and applications i. O rings malfunctioned during launch.

Michael kremer formulated the o ring theory in 1993. Modern production requires each of many activities to be done well for the output to have high value strong complementarity in technology. The 2019 nobel prize finanz dk says.