Research On Supply-Demand Relationships In Local Production Network

In economic activities,various economic sectors or market subjects are interdependent through complex supply and demand relationships,surviving and developing under a symbiotic system,forming production networks,and promoting industrial and regional economic growth.The local production networks(LPNs)is the local scale of the production network,which are essentially upstream and downstream relationships between the neighboring small and middle-size enterprises(SMEs).In the previous studies,most studies only described the structural characteristics of the production network or provided preliminary analysis on the impact factors of the relationships between firms.Based on the transfer data of a local bank in Yiwu from 2009 to 2017,this research uses social network and complex network analysis methodologies to build the LPNs in Yiwu.We not only analyzes the LPNs' topological structure and their changing trend,but also introduces the perspective of embeddedness and dependence between relationships to examine how the variables——supply-demand relationships are affected by other relationships in the network.This study uses the exponential random graph models(ERGMs)to explore the shaping effect of endogenous structural effects and actor-relation effects on the static cross-section of LPNs.From the perspective of firms' market search,we understand how firms' embeddedness in the network affects the dynamic generation of relationships or markets expansion.The main conclusions reached are as follows:First,in recent years,the market size in Yiwu has fluctuated slightly,the supply-demand relationships have been stabilized,and its operation has been stable overall.The transaction relationships in the LPNs are sparse,and they have clear core-periphery structure.The firms in the network are mainly SMEs.However,there is a gradual increase in the number of major firms.Among the key industries,there are relatively few vital firms in the manufacturing,wholesale and retail industries,and they are mainly distributed in food,building materials and chemical industries.By contrast,the number of firms in the construction and production service industries is relatively small but it has spawned more giants.Second,endogenous structural effects affect the static formation of LPNs.Reciprocity and transitivity have a positive impact,while popularity and activity have a negative impact.This reflects that firms in Yiwu tend to reciprocate their business partners,and they choose to deal with others more through middlemen even more.As a result,some small groups have formed in the network.However,in general,the willingness to expand external relationships is not strong,and firms with fewer external relationships are more so.Third,the actor-relation effect affects the static formation of LPNs.Geographical proximity,receiver effect(institution)has a positive effect,sender effect(per capita revenue),and receiver effect(population)have negative effects.This reflects that firms are more of a supplier in the transaction,that firms located in relatively wealthy or less populated areas have higher export capabilities,and that it is easier to conclude transactions between institutions in the same administrative region.Fourth,due to the existence of trade barriers,some factors that can reduce the barriers will promote the generation of supply-demand relationships.The supply side mainly searches for potential demand side by means of direct proximity.Geographical proximity,social proximity and product dependence can increase the probability that the supply side output productions to the potential demand side.At the same time,indirect geographical proximity and indirect industrial proximity can also help suppliers overcome barriers.Geographical proximity,social proximity,and product dependence reduce barriers by reducing transportation costs,promoting trust and understanding,and increasing production demand,respectively.