A Study On The Internal Relationship Between The Process Of Institutional Change And The Change Trend Of Regional Economic Disparity

Most countries or regions have been or are being disturbed by RED(hereinafter referred to as regional economic disparity), which is abyproduct of economic growth. China is also experiencing serious REDnow, including the disparity between Eastern and western regions, thedisparity among provinces, inter-province disparity and urban-ruraldisparity. And these problems have been paid extensive attention to bygovernments and economists.This paper is a trial study on the internal relationship between LPIC(hereinafter referred to as the lopsided process of institutional change)and the change trend of RED by mixing up the basic theory of InstitutionEconomics, Neo-classical Economics and Region Economics. Firstly, wesummed up the typical documents on RED from several perspectives,such as factors, economic strategy, international trade, local governmentand so on. Then so as to make some preparations for ongoing study, wedistinguished and summed up those different arguments on institutional change. Secondly, on the basis of the complicacy of regional institutionand these two traditions' complement of research objects andmethodology, we discussed the possibility and necessity of thecombination of Neo-classical tradition and Evolutionary tradition ofInstitution Economics. Then through modeling the LPIC, we found that itwas possible for LPIC to be expanded by subjects' behavior and theadjustment of social and economic system. Thirdly, we put forwardsimple model on the assumption of constant scale return andhomogeneous production function and broadened the model with loosingthese assumptions. The-conclusions showed that LPIC was theinstitutional origin of the "Matthew Effect" of RED and increasing scalereturn or heterogeneous production function (e＞1) was inclined to enforcethis effect. Lastly, in order to prove our basic conclusions, we gave asimple positive analysis.Different from other RED documents, this paper explored this issueby taking advantage of LPIC. Though this study path was somehowdistinguished, we also got some conclusions that are helpful to expandour understanding of RED.