The Study Of Network Effects In Chinese Urban System

As the development of traffic and information technology, the relationshipbetween cities has not limited in geographical space, but formed city network ineconomic space gradually. Cities in the network interacts with each other through thelinks between their industries. There are two kinds of interaction between cities—theinteraction between similar industries which is called competitive network effect, andthe interaction between complementary industries which is called complementarynetwork effect. In recent years, the connection between Chinese cities has becomestronger and stronger, and the city network is coming to formed. However, theresearch based on traditional hierarchical effect theory ignored the horizontal linksbetween cities. Therefore, it is necessary to research the horizontal links betweencities based on city network theory, and to investigate the influence of competitivenetwork effect and complementary effect to Chinese economy, in order to make moreeffective policy.Base on the city network theory, this paper analyzes the mechanism of thenetwork effect, and constructs the measurements of network effect, then takesmanufacturing as an example to analyze the network effects which cities obtainedfrom the relative city network. By introducing the network effect variable to theproduction function and growth equation, this paper tests the network effects acrossthe prefectural or higher lever cities for the period of2003-2009. The results showthat the competitive network effect Chinese cities obtained through manufacturing isnegative, which means the relationship between cities in the same industry is stillmore competitive than cooperation. While the interaction between manufacturing andthe producer services brings positive complementary network effect, which promotesthe city‘s economic growth.