The "Small World" Phenomena And The Trade Networks

The"Small World"phenomena exit universally in nature and human society, and the small world network presents some special statistical characters. Inspired by the"small world"this paper make a primary scrutiny into the network of division of labor and trades, especially on its functions and topological structure.Mainstream economists neglect the topological structure of economy system, and are unable to study network by adopting the general equilibrium framework. The multi-agents modeling is a fresh modeling method, and correspondingly the computational economics is a new domain of economics. Those problems can't be analyzed before will come into our view again.The"small world"research got a breakthrough recently. The numerical characters of it has been clarified, that is, the small world network has a high clustering coefficient locally, and a low characteristic path length in global network. Even in an economy of two kinds of goods, the failure of coordination between two specialties will lead to an incomplete division of labor. Through the interactions of"producer-consumers", the problem of coordination can be resolved. With the increase of the variety of goods, the network evolves from simplicity towards complexity.The"small world"network has high trade efficiency, and the Pareto improvement can be achieved because the network is fully connected. It is suggested that business men can make the world smaller, by shortening the distance between people. Thus their function are understood and appreciated from a new angle.Trades are the necessary condition of the division of labor. Trades can improve the division of labor from a small scale to industrial cluster in different regions. The whole network of regional industrial clusters and trades among regions has a"small world"character.Since people in real world have local knowledge and limited information, the core of economics is how the individuals with imperfect reasoning coordinate with each other, and then a complex order is formed. From the basic insights of the use of knowledge in society, we bring forward a hypothesis of the static topological structure of a real economy.