# Market-Driven Division

## Definition

The process by which the extent and characteristics of markets determine the degree and pattern of division of labour in an economy. Market-driven division occurs when producers specialise based on the size of potential demand and the costs of exchanging goods.

## Source Chapter

Book I, Chapter 3

## Context

Smith's central argument establishes that it is the power of exchanging that gives occasion to the division of labour, and the extent of this division must always be limited by the extent of that power, or by the extent of the market.

## Economic Domain

Production

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