On Thursday, June 6th, 2006, Doctor Wang Yongqin from China Centre for Economic Studies in Fudan University gave a lecture on Market Extent, Economic Growth and Contractual Forms. Associate Professor Chen Zhao, Associate Professor Lu Ming, Doctor Zhang Yuan, Doctor Kou Zonglai, Doctor Zhang Yan, Doctor Xia Jijun, Doctor Luo Changyuan, Doctor Feng Jing, Doctor Fan Xiangyan and some students took part in this lecture.
At first, Dotor Wang Yongqin illustrated the motivation of doing such a research. He pointed out that market expansion and division of labor is a source of economic growth, and also good institutions matter by enlarging market extent and deepening of division of labor. Now the question is what is the relationship between growth and institutions, or between institutions and technology. Then Doctor Wang reported he and Lu Ming’s research on this subject in detail by establishing a model. In this model, an Individual CES production function is employed and the n individuals are uniformly distributed along a linear city, equally-distanced. Doctor Wang assumed there will be transaction cost incurred between market 1 and the other (n-1) markets as well as gain which is due to the large marginal product of a new factor. So people will maker a tradeoff between the gain and the loss. Doctor Wang regarded that during the market extent and economic growth, there will be changes in the cost of transaction cost due to the change in the institution and technology. He explained the influence of capital accumulation on market expansion in particular. At last Doctor Wang made a numerical simulation by using the model. Also he tried to explaining some historical facts by using the model. For example Natural boundaries of economies and economic globalization: EU versus NAFTA, Service sector (North & Wallis), Needham Puzzle and China Miracle, The Asian Model and so on.
After the report, the teachers and the students had an intense discussion on the topic.
