Government Action In The Private Economic Development Research: Transaction Cost Perspective

China's private economy has made great achievements in the short span of three decades of reform and opening up. It has become an important component of Chinese socialist market economy and one of the main driving forces of national economic growth. Therefore, whether private economy will keep healthy and stable development is directly related to China's economic sustainable development in the 21st century. That is also the reason why private economy has become increasingly important subject to the academic field.Development of Chinese private economy has very close relationship with governmental behavior. Since reform and opening up, China's governments at all levels have continuously relax the policy environment for the development of private economy, improved related laws and policies and improved their own service, which have effectively promoted the rapid growth of the private economy. But at the same time, there are also many deficiencies of governmental behavior, which has been a confining factor for development of private economy in depth. Thus, it has important theoretical and practical value to analyze governmental behavior in the development of private economic and explore strategies to improve it.Innovation of the study of governmental behavior in this paper is the introduction of transaction cost theory as a tool. Transaction cost theory is the theoretical cornerstone of New Institutional Economics. It has wide application value and explanatory power and thus, people gradually apply it to public administration area so as to add solutions to public problem.This article is divided into four parts:In the introduction, it mainly discusses topic selection, research value, and relevant literature review and research methods.The first chapter makes theoretical definitions for relevant subjects. It focuses on the basic connotation of "governmental behavior", "private economy" and "transaction costs" as well as relationship between each other.The second chapter discusses government's behavior of Zhuji city in local private economic development from the view of transaction costs theory. On the positive side, government of Zhuji city has effectively reduced transaction costs and promoted development of local private economy by clarifying and protecting property rights, promoting formation and development of industrial cluster, improving financing environment and carrying out reform of administrative examination and approval system. To view from the negative side, the government has also caused increase in transaction costs because of the failure to remove market access barriers, the existence of government's rent-seeking behaviors, the low administrative efficiency as well as insufficient supply of public services and so on. As a result, the improper governmental behavior poses negative influence on local private economy.The third chapter proposes solutions in the framework of transaction cost theory for Zhuji government to promote private economic development. This is the core content of the paper. It puts forward suggestions mainly from two aspects of transforming government functions and regulating government's behavior. In the end, the article further proposes specific measures of improving private economy.