Study On The Mechanism Through Which Openness Influence Institutional Change And Effects Of China's WTO Accession On Institutional Transition

Although theory of institutional change has made great progress since 1960, existing theories fail to explain well the channel and mechanism through which openness influence institutional change. Based on a survey of related research, the paper relates environmental change cause by openness and flow of resource with institutional change. Then the channel and mechanism through which openness influence institutional change is analyzed, of them machnism of institutional change, institutional learning, and entry-exit are paid more attention to. Next, this framework is used to study the effects of China's WTO accession on the pattern, speed and economic performance of its transition toward market economy.If the free flow of resource across border is taken into account, institutional change is called in the paper change under opening-up condition. From state of autarky to openness means some factors change, for example, market scale, relative price, risks, externality and so on. These changes in turn make market competition more severe and cause products and production factor to flow across border. In this way, mechanism of institutional change, institutional competition and entry-exit come into being, which alter net benefits, net benefits structure of different institution and set of institution. Then, institutional change takes place. This is the channel through which openness gives an impact to institutional change.Under an opening-up condition, market competition will make institution competition more intensive. A game model including n countries which competes with each other both in market and institution is developed in this paper. The model indicates that the larger the openness, the faster the institutional change. It is because that given other countries' institution, the marginal revenue of one country's institutional change will increase with the degree of openness. On the other hand, if one country does not change its institution while another country does, its marginal revenue will decrease with the degree of openness. At the same time, changes in other factors such as technology will have more impacts on institutional change if openness...