The Study Of Excessive Competition To Recession Impacts In SME Clusters:

As a special form of industrial organization, SME (Small-Medium Enterprises) clusters show strong economic vitality in recent years and play an important role in regional economic development. However, the establishment of enterprise cluster doesn’t mean to live forever, such as vacuum cup cluster of Yongkang was "a flash in the pan". According to the characteristics of SME clusters, this paper brings forward that excessive competition is one of the important factors to lead to SME clusters’ decline.This thesis starts from the analysis of declining cluster cases at home and abroad, and combines industrial cluster theory and excessive competition theory, and analyzes the connection point of the two theories, and brings forward this textual thought, by using game theory models and cases to analyze excessive competition in SME clusters.Firstly, this paper analyzes the formation mechanism of excessive competition. There are low entry barriers, high exit barriers, and product homogeneity three factors leading to excessive competition. Then it constructs game models to conclude that whether a company comes into a cluster has to do with entry barriers and obstacles from existing firms; whether a company reduce production is related to sink cost; product homogeneity leads to price down and profit loss because of over imitation. In SME clusters, potential companies get into clusters easily because of low entry barriers; firms have difficulties to exit clusters because of specialized assets and personnel; sink cost leads to surplus production; product homogeneity is serious because of knowledge spillage leading to easy imitation. All of those will result in excessive competition easily.Then, this thesis analyzes the excessive competition performance in declining phase and current governance in the case of sweater cluster of Honghe to verify the above theory. At last, it discusses the harm of excessive competition brought to consumers, enterprises, clusters and regional economic development and puts forward related recommendations from enterprises, government and industry association three aspects to make excessive competition become effective competition.