Research On The Docking Mechanism Of Smallholders And Large Market Transaction Cost Theory

With the reform and opening-up and the development of socialist market economy, the agricultural products market in China gradually changes from the seller’s market to the buyer’s market. However, because of the dispersity of smallholders and the family management agricultural land system, individuals in the agricultural products market are powerless and difficult to form joint force. Since the market information is of strong asymmetry and abstains from market power, it endows the smallholders with no full power to set price or bargain, which leave them in an unfavorable position and ultimately their benefits cannot be guaranteed. But how to achieve the circulation and docking between smallholders and large market is crucial to improve the circulation efficiency of agricultural products, enhance international competitiveness of agricultural products and realize the transition from traditional agriculture to modern agriculture.Based on this background and in the theory deduction, this paper, combining current classic domestic and foreign literature, arrives at a conclusion that there are three kinds of transaction behaviors between smallholders and large market and accordingly infers three docking mechanisms, they are horizontal cooperation docking mechanism, vertical integration docking mechanism and network virtualization docking mechanism. On the basis, it works out three methods of achieving good connection between smallholders and large market by using the "SCP" analysis framework in industrial economics and deeply analyses the theories, premise factors, specific mode and the influence of mechanisms on the performance. In case study, the docking experience of smallholders and large market in the process of agricultural modernization in developed countries including America, Japan, and France and Taiwan has laid a foundation for realizing the docking in China. The author, by convenience sampling in23counties of Hubei, Henan, Hebei, Jiangshu province, has collected958valid data from rural households and thus verified the above results.The results show that firstly, there are three kinds of docking mechanisms of smallholders and large market in China-horizontal cooperation, vertical integration and network virtualization. The selection of model is affected by not only market environment, social and market norm, but also the degree of special assets investment and transaction frequency; secondly, in the structure of "transaction characteristics--transaction mechanism--transaction performance", the maximum factor affecting smallholders’ transaction performance is the uncertainty of demand and supply and private equity investments of farmers and buyers. The docking mechanism of "smallholders and large market" has a significant impact on farmers’ transaction performance and the transaction mode farmers selected is an effective method of achieving progress in transaction performance; thirdly, the binding force of commitment and trust in the docking mechanism impels farmers to choose the horizontal cooperation transaction behavior, while the binding force of power and contract has no significant impact on the vertical integration transactions behavior and the binding force of social and market norms prompt farmers to select the transaction behavior of network virtualization.Based on the results, the author deduces specific mode of three execution paths of horizontal cooperation, vertical integration and network virtualization. In the context of different transaction characteristics and behavior binding force, farmers will choose different organizations, such as agriculture cooperation organizations, leading enterprises and joint farmer-based e-commerce electronic trading market organizations, to help them participate in the market. Through the construction of the path security system, it contributes to expanding their performance and achieving steady income increase.