Transaction Cost Analysis Of Guangdong & H.K.'s "Store In The Front, Factory In The Back" Economic Cooperation Mode

Store in the front, factory in the back" is the dominating cooperation mode in Guangdong&H.K.'s economic cooperation. Previous literature mainly based the research on the comparative advantage theory of the production cost, not paying too much attention to the transaction cost analysis of the cooperation. This paper, from the angle of transaction cost, analyzes the "Store in the front, factory in the back" mode as a form of economic organization, revealing the importance of the transaction cost in Guangdong&H.K.'s economic cooperation.This paper is divided into six parts. The prologue defines the objects of research and reveals the basic connotation of the mode, and also briefly explains the selection of the theme, general way of thought, new ideas, methods of research and the structure of the paper. The first chapter briefly comments on the previous research literature, pointing out that when discussion of Guangdong&H.K.'s "Store in the front, factory in the back" economic cooperation mode, it is not enough to only compare production cost, but should pay more emphasis on the research of the transaction cost. Providing a analysis frame for the discussion of Guangdong&H.K.'s cooperation, the second chapter mainly introduces the American economist, Williamson's transaction cost theory, which mainly includes assumption of behavior, dimensional analysis, and system structure, etc. The third chapter researches on the transaction cost and compares the transaction costs of different modes, clarifying that the saving of transaction cost is one of the important causes of the "Store in the front, factory in the back" mode. The fourth chapter analyzes the change in the transaction cost resulted from the change in the current conditions of the economic cooperation, and from the viewpoint of traditional industries and Hi-tech industries, reveals that the "Store in the front, factory in the back" mode are still vigorous but has a tendency of switching to the "Integration of store and factory" mode. The last chapter, the fifth one puts forward some policy advice regarding reducing the transaction cost of the "Store in the front, factory in the back" mode, prompting the switch from the "Store in the front, factory in the back" mode to the "Integration of store and factory" mode, and establishing good system environment.