Institutional Change Phase Of Shanxi Merchants

Shanxi merchants who emergenced in Ming Dynasties and prospered in Qing Dynasties lived for five hundreds years and were finally dispelled from history stage in the 20th century.Among a lot of factors to influence Shanxi merchants' change, the paper believes the institutional change is the key cause. Having adopted the history institutional economy, the paper deemed that the institutional change is a gradual process and the institutional change can be classified as three phases in the process of institutional change for Shanxi merchants .1. The innovation phases. The paper analyses that the institutional change happen just because the new arrangement can 'reap more benefit than the old one for all participants. Benefit is the driving force of all institutional change. And using game theory it analyses Shanxi merchants institutional' innovation and each institution emergence is a result of different interest group playing chess repeatedly.2. The propotion phases. The paper insists that the whole institution system in the coupling state have played a major role in prospering of the Shanxi merchants.3. The stagnation phases. The paper summaries the characteristics of the institution, presents the behave while the institution is the process of vacuum and impact, and points out that the decline of Shanxi merchants is inevitable if institutional innovation is no made during the phase .