Study On The Industrial Organization Model’s Transition Mechanism Based On Subjective Game

The study subject of industrial organization is the organized relationship or market relationship among enterprises in an industry. The model of industrial organization is a kind of specific model of relationship about the division of labor and cooperation organization among the enterprises in the industry. According to the development of the history, there is a dominant model of industrial organization every term, and the dominant model of industrial organizations of every terms are not identical, namely industrial organization model is in a transitional process. In general, people be divided the process of industrial organization transition into three stages. They are the single enterprise dominant model of industrial organization, the vertical integration of large hierarchical enterprise as the dominant industrial organization model and the modular production network organization model.Traditional industrial organization theory mainly focused their research on the market structure and market performance, namely the market relationship among the enterprises in the industry. They concerned so little about division of labor and cooperative relationship among the enterprises. The new industrial organization theory offset the insignificance of the main industrial organization theory to a certain extent, and focuses on the organized relationship among enterprises. Analyzing enterprises’interior structure, the relationship between the enterprises and the market, and enterprise organized behavior with the transaction cost theory. But the new industrial organization theory explains the reason of emergence of new governance based only on different model’s advantage, which is a kind of functional explanation, rather than a causal sequence. And the research of the new industrial organization theory is based on the static equilibrium, rather than dynamic process. Therefore, the new industrial organization theory hasn’t formed a complete theoretical framework for the transition of industrial organization model, but the research of the part of the whole transition process. Although Austrian school study the topic of industrial organization from the dynamic point of view, but it is mainly concerned with the market. And it neglects the enterprise. It’s a kind of systematic theory.At present, the industrial organization theory lack of an entire theoretical framework to explain the transition of industrial organization model, while the research of this paper is a remedy. This paper tries to construct a complete theoretical framework to explain the industrial organization pattern transition mechanism. And according to the transition mechanism, we can find out the countemeasure to promote and accelerate the transition of the industrial organization model.This paper explain industrial organization mode transition based on the traditional two tasks given by Austrian School of economics:" make the world explained by human action" and "interpretation of human’s purposeful and social interactional actions how can produce unintended results". Namely we use the entrepreneur’s purposeful actions to interpret the reason of industrial organization model’s transition, which is regarded as the unconscious result of industrial entrepreneurs’purposeful actions.The model of industrial organization is the specific model of cooperation and division of labor among enterprises in the industry, and the process of the formation of industry organization model is the process of the enterprises to determine its boundary. By determining its boundary, the industry cooperation and labor division among the enterprises was formed. The essence of industrial organization model is a kind of institutional arrangement about the organizational relationship of the division of labor and cooperation among the enterprise inside the industry. It determines the division of labor and cooperation relations of the enterprise, but this institutional arrangement is the entrepreneur’s behavior’s unconscious result. So it is a kind of spontaneous order.This kind of spontaneous order can be regarded as the equilibrium of the game among the entrepreneurs inside the industry. Due to the entrepreneur’s cognition to the game player, each participant’s strategy set and gain of function is based on subjective recognition, differing from one another, so the game is not objective game, but subjective game. This paper construct the subjective game model on the industrial organization model transition, and interpret the industry organization pattern’s transition as a process of moving from one subjective of game equilibrium moves to another. There are two kinds of factors could cause subjective game equilibrium to change, one is the change of the external environment factors, the other is the accumulation of endogenous factors.Enterprise is inevitably in certain environment, and restricted and influenced by the environment. Technology environment, institutional environment, and market environment compose the environment affecting the industrial organization model. On one hand, the change of the external environment affect the game participant strategy’s space, making some originally unavailable strategy available, or conversely. On the other hand, the change of the external environment affects the game participant revenue function parameters, so the same strategy has different outcome when the environment changing.This is mainly because that the environment changes will affect the transaction attributes, and it can save the transaction cost by matching the different transaction attributes with the different governance structure. When the strategy keeps unchanged, namely governance structure unchanged, and the transaction attributes are changed by the changing environment, the transaction cost will inevitable changed. It is mainly because the revenue function parameters are changed, which makes the income change. Game player acting as an entrepreneur, have the entrepreneurial spirit to find the opportunity and make innovations. When some entrepreneurs find the changes of game form, he find the relevant market opportunities, which will lead him to make new innovation and adjust the strategy. And it will inevitably lead to the change of game equilibrium. When all game players the strategy is consistent with their expected earnings, a new game equilibrium occurred, and the model of industrial organization changed.The endogenous accumulation of knowledge can also cause the change of the game player’s the strategy space and revenue function’s parameters. When endogenous factors accumulate to a certain extent, the game players will recognize the change of the game form; they will make the adjustment of strategy. When the adjustment of the strategy brings the expected revenue to respective participants, the new game equilibrium occurs, and the model of the industrial organization move from one equilibrium to another equilibrium. Generally speaking, due to the limited rationality, people only know the fragment of the knowledge. Man can not master all the knowledge. Entrepreneurs as an actor are limited rationality too. Although in certain knowledge range, entrepreneurs’ coordination of dispersed knowledge through the authority in the enterprise has advantage relative to market, with the knowledge accumulation of different aspects of the transaction, it’s harder for the entrepreneur to coordinate more and more knowledge. The advantage of the coordination of knowledge in the firm relative to the market decline. When entrepreneurs recognize the change, they will make the adjustment, and separate the transaction without advantage from the firm, and organize these transactions through a kind of governance structure between the firm and the market, in order to save transaction cost. So the division of labor and cooperation among the enterprise appears, form a new model of industrial organization.This paper is divided into7parts as follows: The first chapter is introduction. Mainly introduces the research background and the research significance, research method, research ideas and framework. Sort out the research literatures, give the briefly comments, also introduce the main research content of the paper.The second chapter introduces the theory related to our study, including the theory of transaction cost, theory of Austrian school and subjective game theory. And introduced hypotheses of consistency among the three theories to bridge the communication among the theoriesThe third chapters construct a basic theory framework of industrial organization transition based on subjective game model. The industrial enterprises’organization mode of competition and cooperation relationship is regarded as a subjective game, and the model of the industrial organization is the subjective game’s equilibrium. The transition of the industry organization model is actually the moving from one equilibrium to another. The change of external environment, as well as the endogenous accumulation will cause the entrepreneur’s subjective cognition to change, and it cause game equilibrium to change, which means the change of industrial organization model.The forth chapter separately analyzes the effects to the model of industrial organization brought by the changes of the external environment. The change of Enterprises’external environment vector will trigger the change of game form. On one hand the entrepreneur’s strategy space is changed, on the other hand entrepreneurs’ revenue function parameter is changed. This is mainly because the transaction attributes are changed. When entrepreneur recognize the change of game form brought by change of the environment, the entrepreneurs will make the adjustment. The change of the entrepreneur’s strategy will inevitably lead to the change of the equilibrium, until the revenue brought by the new game player strategy is consistent with expectation, and the new game equilibrium occurs, which also means that new model of the industrial organization occurs.Chapter five separately analyze the effect to model of industrial organization transition brought by the endogenous accumulation of knowledge. Firstly explains the classification and the nature of the knowledge. Then explain the compatibility between the distributed knowledge and enterprise authority. Further we analyze the difficulty of the entrepreneur as authoritative coordinator to coordinate the different knowledge when knowledge to dispersed form in different enterprise member accumulates, and it means the transaction cost to coordinate the different knowledge in the firm will increase. In fact, it’s mainly because the game form changed, namely entrepreneurial strategy set and revenue function parameters are changed, and thereby the entrepreneur will adopt the new strategy, which will lead to the equilibrium change and the change of the model of industrial organization.In chapter six, based on theory framework of the industrial organization model transition constructed, we analyzes the history of industrial organization mode, and forecast the development trend of industrial organization based on the change of enterprise external environment and the endogenous knowledge accumulation.Chapter seven is the summary and enlightenment; we summarize the theory framework of the model of industrial organization transition, and get the enlightenment from industrial organization model transition mechanism, regarding the industrial organization model’s transition as a spontaneous process. The government should reduce the intervention, and the role of the government should be to maintain and improve the market mechanism; make impersonal market forces play a role...