Reintegration:a Type Of Modularization Trap

In recent years, modular production patter is widely used in many areas, which attracts the attention of economists. Modularity theory develops rapidly and obtains fruitful results. Most modularity theory adopt static or comparative-static analysis methods, however, in a modular system, modular division is a ceaseless metabolic process. It is frequently observed that a type of module merges with another over time and the enterprise is excluded from the modular production networks. We call this phenomenon as "reintegration", which is a type of modularization trap to damage the interests of relevant enterprises. A typical example of reintegration is that the functions of kinds of independent software had been integrated into Microsoft Windows gradually.It is generally accepted that the merit of modularity is creating option value, which depends on the design risk of the product. By absorbing some viewpoints of technology cycle theory, the paper analyzes the dynamic changes of design risk and discovers the rule that option value declines with technology evolution, thereby explaining the formulation of modular reintegration phenomena, supporting from the theory of joint pricing. And on that basis, the paper presents a type of evolutionary pattern of modular system. Finally this paper gives suggestions to firms on how to avoid the risk of reintegration.The conclusions of the paper are that modularity is the product of the certain stage of technology cycle. Whether a type of module exists independently depends on the stage of the module in the technology cycle. With the evolution of technology the module's option value will decline and the module will lost its value to exist independently. Finally it will merge with another.