Specialized Markets in China
Chapter 4: Local Government and Platform Governance in Yiwu
Source: Copyright © 2006, Huang Xiaochun. Figure 4.1 A campaign called “Establishing Credibility as an Exemplary Market” in Yiwu Market 4.1 INTRODUCTION Chapters 4, 5, 6 and 7 investigate the basic structure of the specialized markets by use of a case study of Yiwu China Commodity City (Yiwu Market). Through the interaction between local government, regional groups of merchants and countless small firms, Yiwu Market has grown into the largest specialized market in the world, and has become the most important innovator in the specialized market system. By focusing on this 52 M2920 – DING 9781781006276 PRINT.indd 52 20/06/2012 13:15 Local government and platform governance in Yiwu 53 market, it has been possible to clarify the evolutionary mechanism of the specialized markets in China. Chapter 4 first focuses on the role of local government in the development of Yiwu Market. As has been pointed out in Chapter 2, although existing two-sided market literature assumes an omnipotent platform manager, it is actually faced with various difficulties in the real world. The first difficulties are the barriers to trade, which are caused by various institutional and informational factors. The second difficulty concerns the physicality of a platform, which is caused primarily by realestate-related institutions and transaction costs. Appropriate platform governance is indispensable for overcoming these difficulties. Regarding this issue, previous studies have suggested that the local government is a key actor. The role of local government in deregulating the private sector, guaranteeing credibility and so on has been mentioned briefly (see Chapter 1)...
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