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Abstract The paper establishes “model of the evolution of the exchange market”. Through taking Zhejiang industrial cluster formation process as an example and comparing the exchange mode in the market, the paper draws conclusions as follows: ①It exists a unique equilibrium in the market where some trade was accomplished by decentralized matching between Zhejiang traders and consumers while others by setting prices through a business firm,. Meanwhile, there exists critical level on which the exchange modes can be transformed to each other. ②The exchange modes will have different effects in different markets, and the existence of Zhejiang traders can improve social welfare. Market has a mechanism of economizing on transaction costs. ③Zhejiang traders play an important role in the growing of industrial clusters. They explore markets, enhance competition in the market and accelerate development of industrial clusters.
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Received: 24 April 2007
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Corresponding Authors:
DONG Ye-Ran
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2007, Vol. 1 
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