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Industrial Specific Resource Allocation, Incentive Differentiation and Industrial Development Order: the Function Evolvement of Jiangsu Laver Association in Anti-Trade Barrier Litigation

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Zheng, Jianghuai
Jiang, Jing

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Abstract

For sake of actualizing anti-trade barrier and changing the situation of price war after China’s taking part in WTO, Jiangsu laver association was founded. By using the Bayesian Cournot model, this paper analyzes the basis of trade association’s foundation is the ability of improving product quality and technique which is distributed heterogeneously in the firm of the industry. The paper defines this kind of ability as industrial specific resources which are formed during the process of industrial competition and development. Actually they are potential rents and laver firms can acquire them selectively by laver association’s enforcement of transaction rules in laver exchange office. It changes the industrial competition from reducing quality and price to upgrading quality and price and forms the basis of association’s existence. Whether the function is strong or not depends on association’s understanding of industrial specific resources and incentive benefits which is given to the member firms. It is not that association comes into being by the appearance of industrial specific resources and dies because of disappearance of industrial specific resources, but that association uses industrial specific resource into firms and it can reach a kind of separated equilibrium during the competition of improving quality and raising price. Association improves the quality of transaction governance continually and keeps the separated equilibrium maintained steadily. It makes the whole industry in good development order.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 200.

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Date of creation: Aug 2006
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Handle: RePEc:pra:mprapa:200

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Related research
Keywords: trade association industrial specific resources selective incentive

Find related papers by JEL classification:
Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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