Models of China s E-Commerce in the Agricultural Sector: an Exploratory Study

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1 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06), pp Models of Chia s E-Commerce i the Agricultural Sector: a Exploratory Study Ji Wag, Xiaolog Zhu ad Che Zhag 3 College of Ecoomics & Maagemet, Ahui Agricultural Uiversity, Ahui, P. R. Chia Ahui Busiess Vocatioal College, Ahui, P. R. Chia 3 School of Busiess, Ahui Uiversity, Ahui, P. R. Chia wagi-05@63.com Abstract We first review the curret literature o the status quo of Chia s E-commerce i the agricultural sector. The model of farmers selectio of stakeholders i agricultural E- commerce is aalyzed based o icomplete cotract theory ad right to etry theory. We coclude that the developmet of agricultural E-commerce follows a dyamic evolutioary model. To gai the largest profits from E-commerce i agriculture, the farmers eed to dyamically adust the cooperative relatioships with the stakeholders uder a costatly chagig ecoomic eviromet. Keywords: E-commerc i agricultural sector, Icomplete cotract theory, Etry theory, Dyamically adust. Itroductio Chia has over 5 thousad years of agricultural civilizatio, ad the cetral govermets attach great importace to agricultural developmet sice the foudig of New Chia. After Chia s reform ad opeig-up, the cetral govermets have issued No. Documet for times. Hu Jitao's report delivered at the 8th Natioal Cogress of the Commuist Party of Chia regarded solvig problems cocerig agriculture, farmers ad rural areas as the top priority. Thus the three rural issues have become part of the atioal strategy. Chia s rural areas have made tremedous progress i recet years with grai yield icreasig for cosecutive years ad farmers icome growig at fast speed. Farmers life has take o a brad ew outlook. As Chia s rural areas are opeig up ad farmers are becomig richer, Chia s agricultural sector is udergoig the trasitio from traditioal agriculture mode to moder agriculture mode. Although Chia is a large agricultural coutry, it is ot a agricultural power. The three rural issues cosist of the followig aspects: () employmet of farmers. I the geeral cotext of urbaizatio, farmers that have specific skills or strog physique go to urba areas to ear a livig, leavig the elderly, childre ad wome behid. The left-behid rural residets have o formal obs ad stable icome, which creates may social problems. The mai task at preset is to develop local rural eterprises, trasformig farmers ito workers. This will cotribute to agricultural moderizatio ad provide a better life for the farmers; () lack of capital for developig agriculture ad rural areas. Chia has already lauched the policies i supportive of three rural issues icludig the fiacig policies. However, the urba capital caot go ito the support of rural developmet due to high risk or lack of fiacig chaels. Therefore, the developmet of agriculture, forestry, husbadry ad fishig idustry is hampered by the shortage of low cost capital. Moreover, Correspodig Author ISSN: IJUNESST Copyright c 05 SERSC

2 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) the rural private capital is limited i quatity ad high i cost ad therefore carries a large risk; (3) rural-urba icome gap ad the issue of icreasig farmers icome. Give the large rural-urba icome gap at preset, it is still ecessary that idustry back-urtures agriculture, ad city back-urtures rural areas. Due to govermetal regulatio of commodity prices, the pricig of some agricultural products caot be completely marketized. Some agricultural products are udersold. I additio, the factors of distributors ad logistics, iformatio asymmetry, ad the presece of too may itermediates betwee farmers ad cosumers result i disadvataged positio of farmers i the idustrial chai. The farmers are facig great difficulties i icreasig their icome. The dream of realizig the great reuveatio of the Chiese atio is fouded upo properly resolvig the three rural issues ad four moderizatios. Icreasig farmers icome is a importat step for promotig moderizatio of Chia s agriculture, which ca be drive by iovatio. Chia has witessed a eormous developmet of E- commerce i various sectors. Servig as a advaced productive force, E-commerce has great potetial i improvig idustrializatio of agriculture, agriculture structure adustmet, reducig the trasactio cost i agriculture ad expadig the market ad sales chael of agricultural products. Thus the iovatio i agriculture ad the solutios to three rural issues are based o combiig agriculture ad E-commerce. Developmet of Chia s E-commerce i agriculture has ecoutered several challeges at preset. We coduct a game aalysis of the developmet model of agricultural E-commerce by usig right to etry theory ad propose a dyamic evolutioary mode of agricultural E- commerce.. Curret Developmet Status of Chia s E-Commerce i Agriculture For a very log time, the cocepts of Iteret ad E-commerce are liked to Iteret compaies, fiace, commerce ad maufacturig idustries. Very few people will thik of E-commerce i agriculture. Accordig to the statistics of Chia Iteret Network Iformatio Ceter (CNNIC), the umber of Chia s Iteret users was 649 millio by the ed of 04 with a icrease of 3.7 millio i 04 aloe. The Iteret peetratio rate was 47.9%, which was higher by. percetage poits compared with 03. The umber of Iteret users ad Iteret peetratio rate i Chia i the past 0 years are show i Figure. Figure. Number of Iteret Users ad Iteret Peetratio Rate However, the Iteret use i agriculture, forestry, husbadry ad fishig idustry accouted for oly.%; the umber of Iteret users egaged i agriculture, forestry, 390 Copyright c 06 SERSC

3 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) husbadry ad fishig idustry accouted for.%. By the ed of 04, the total populatio of mailad Chia was millio (icludig 3 provices, autoomous regios ad muicipalities directly uder the cetral govermet ad PLA elisted soldiers i active service, but excludig Hog Kog, Macao Special Admiistrative Regio ad Taiwa ad overseas Chiese). The rural permaet residets totaled millio, accoutig for 45.3% of total populatio. However, the Iteret users i rural areas oly accouted for 7.5%. Therefore, icreasig the umber of Iteret users i rural areas is crucial for promotig E-commerce i agriculture. The percetage of Iteret users i urba ad rural areas i 03 ad 04 is show i Figure. Figure. Percetage of Iteret Users i Urba ad Rural Areas i 03 ad 04 E-commerce represets a advaced productive force ad a revolutio of commercial activities by iformatio techology. E-commerce has bee very active i various sectors, icludig govermet, higher learig istitutios, scietific research istitutios, ad social service orgaizatios. The peetratio of E-commerce ito agricultural sector is a ievitable tred. E-commerce i agriculture refers to the applicatio of E-commerce i agricultural activities. I a arrow sese, it ivolves the use of Iteret (icludig mobile commuicatio etwork) for iformatio services ad the matchig betwee demad ad supply. From the perspective of farmers, it is the use of Iteret for sellig agricultural products ad purchasig agricultural productive meas. I the geeralized size, E- commerce i agriculture also icorporates the aspects of marketig, techological research & developmet ad popularizatio, kowledge traiig, seekig for employmet iformatio, purchasig articles for daily use ad village affair maagemet, all by usig Iteret. Zhao [], Zhag et. al. [], Jiag [3] ad Gog et. al. [4] ivestigated the applicatios of E-commerce i agriculture, idetified the problems ad proposed several coutermeasures, which ca be summarized ito 3 categories: first, the guidig ad promotig role played by the govermet. Almost all researchers regard this as oe of the maor strategies. They emphasized the importace of fiscal subsidy, favorable tax policies, other preferetial policies ad relevat laws ad regulatio i promotig E-commerce i agriculture. Moreover, the cetral govermet ca achieve demostratio effect by iformatizatio of the agriculture-related departmet. Secodly, costructio of hardware, such as buildig agricultural E-commerce platform ad agricultural databases. Some scholars highlighted the role of mobile commuicatio operators i icreasig Iteret peetratio i rural areas. Thirdly, costructio of software, which focuses o chagig the mid. This etails the emergece of farmers, rural brokers ad farmers cooperative Copyright c 06 SERSC 39

4 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) orgaizatios that are familiar with the use of Iteret through traiig o agricultural E- commerce implemetatio capacity ad cultivatio of agricultural E-commerce talets. The leadig eterprises should fulfill the drivig role ad make efforts to improve the supportig services eviromet icludig paymet, logistics, credit, stadardizatio ad bradig. Peg [5] divided Chia s E-commerce model i agriculture ito MM model (market to market model), strategic alliace model, itermediate model, ad membership model. Li [6] proposed 3 models, amely, iformatio alliace service provider model, farmer iformatio service provider model (text message model, rural broker model, membership model), ad eterprise iformatio service provider model. Wag et. al. [7], o the basis of BB ad BC, icorporated supply-sellig itermediate to form a ew BBC model. Accordig to Yag et. al. [8], besides BB, there were also PCB ad PGB model, where P stads for idividual peasats, C is cooperative, B is eterprises egaged i sellig, circulatio ad processig of agricultural products, G is agriculturerelated govermetal departmet. Wu [9] devised the cocept of BF (busiess to farmer). Ga et. al. [0] coceptualized the future E-commerce model i agriculture, proposig the buildig of super-large agricultural E-commerce platform ad E-commerce alliace. Oce the iformatio flow problem is settled by the use of Iteret ad mobile commuicatio etwork, logistics will become the restrictig factor i agricultural E- commerce. Esurig the implemetatio of agricultural E-commerce by supply chai maagemet was advocated by Yi [], Yi et. al. [], ad Liu et. al. [3]. They made relevat discussios o logistics, collaborative logistics ad itegrated supply chai, which were all cocered with the role of the third party i sellig agricultural products. 3. Problems Existig i Chia s E-Commerce i Agriculture Chia still has a high illiteracy rate i rural areas, where the agricultural techology level is low, computer owership is low ad iformatio circulatio is poor. The circulatio of agricultural products has too may liks with high trasactio cost ad fractured supply chai. Farmers are facig great difficulties i icreasig their icome. Chia still has a log way to go before radically resolvig the three rural issues. Idividual farmers ad small-scale rural operatives have poor ability i collectig ad aalyzig market iformatio. All these have seriously restricted the developmet of E- commerce i agriculture, as summarized below [4-5]. () Low level of agricultural iformatizatio. May agricultural eterprises i Chia have low level of agricultural iformatizatio with iadequate popularizatio of iformatio etwork. There are oly a limited umber of websites related to agricultural E-commerce, ad the o-lie trasactio fuctios are far from perfect. Maagemet withi the eterprises eeds to be improved i terms of iformatizatio level. () Low awareess of usig E-commerce. May rural eterprises i Chia have poor kowledge about Iteret, ot to metio the acceptability ad applicatio. They are ot fully clear about the cocept of E-commerce i agriculture ad lack the awareess, methods ad techique i usig Iteret for moder maagemet. Moreover, give the huge ivestmet, log cycle ad high maiteace load of E-commerce, may rural eterprises doubt whether E-commerce ca brig huge busiess opportuities ad profits. (3) Poor awareess of what should be doe with E-commerce. The core of iformatio techology lies i iformatio istead of techology; the core of E-commerce is busiesses ad ot electroizatio. Iteret opes up ew chaels for expadig busiesses. However, some rural eterprises oly care about hardware costructio ad immature high-tech. They do ot seem to be aware of the importace of optimizig ad itegratig iformatio resources iside ad outside the eterprises. Therefore, they ca hardly reap high efficiecy ad high profits from E-commerce. (4) Icomplete E-commerce eviromet. The laws ad regulatios over bakig, iformatio idustry, taxatio, customs ad fiace related to E-commerce are far from 39 Copyright c 06 SERSC

5 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) perfect. The market of agricultural products has low level of stadardizatio ad orgaizatio, which also lowers the trust of farmers towards E-commerce. (5) Distictive features of agricultural products. Agricultural products are seasoal products ad should be stored with extreme cautio. Therefore, the preservatio, trasportatio ad post-harvest treatmet of agricultural products are more difficult compared with idustrial products. This further aggravates the difficulty i implemetig E-commerce i agriculture ad causes suspicios as to whether E-commerce i agriculture is really feasible. (6) Poor access to Iteret resources. E-commerce i agriculture has a high operatig cost due to scarcity of o-lie resources, high cost of Iteret services ad high ret of special cables. (7) Poor skills of practitioers egaged i agriculture. At preset, agricultural practitioers i Chia have low cultural competece ad iformatio techology applicatio skills. These are also the factors restrictig the implemetatio of E- commerce i agriculture. Although Chia s rural areas are backward i may aspects, the cetral govermet has bee ehacig the support for agriculture through policies ad fud. It is ecessary to improve the ifrastructures of agricultural iformatizatio, farmers cultural competece ad iformatio techology applicatio skills, update the maagemet cocept of rural eterprises, optimize the E-commerce operatig eviromet ad reduce the cost of Iteret services. Oe of the quick solutios is to fid stakeholders who are willig to cooperate with farmers i agriculture. They will play a importat role i buildig agricultural E-commerce platforms ad leadig the trasitio of maagemet cocept ad model of rural eterprises so that the pace towards implemetatio E- commerce will be accelerated. 4. Aalysis o the Model of E-Commerce i Agriculture To resolve the above problems, the first step is to locate the potetial stakeholders. We perform a game aalysis over the cooperative model betwee the farmers ad the stakeholders i E-commerce by usig icomplete cotract theory ad right to etry theory based o Value Added Corporate Goverace Theory[6]. Suppose farmer F has some agricultural products to sell via E-commerce, ad he eeds the assistace from stakeholder S (eg., a leader of a successful E-commerce eterprises i other sectors or govermetal leaders). The stakeholder S will ivest for this purpose, either i the form of material resources or special talets that possess the required skills to provide assistace. Thus the stakeholder S will share i the beefits of sellig the products. Suppose the ivestmet by S at time 0 is i, which represets the level of ivestmet ad the private ivestmet made by the stakeholder. If there is oly oe stakeholder who ivests ad shares i the beefits, the the gais (Value Added) made at time is V. V is i i a stadard cocave productio fuctio. If there are several stakeholders, the the fial output V is determied by the combiatio of all these ivestmets, which is supposed to be added up (obviously, there are more ways of combiatio, but the ivestmets ca be simply added up i most situatios). Therefore, the Value Added created by ivestmets made by stakeholders is calculated as V ( i ) V ( i ) () For fuctio V ( i ), ' V ( i) 0 ad '' V ( i) 0. Figure. 3 depicts the sharig of gais amog stakeholders. At time 0, stakeholders ivest resources for sellig the agricultural products, ad they make adustmet of the level of ivestmet betwee time 0 ad time. At time, the stakeholders will bargai over the gais ad make predictios of the gais. Copyright c 06 SERSC 393

6 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) At time, the stakeholders will share i the gais (Value Added) obtaied by sellig the agricultural products via E-commerce. Referrig to icomplete cotract theory proposed by Hart et. al. (990) [7] ad right to etry theory by Raa et. al. (998) [8], we use Shapley value to describe the bargaiig with the farmer ad the predictio of the gais. Time 0 Stakeholders ivest ad share i the gais Stakeholder bargai with the farmer over the gais Figure 3. Stakeholders Sharig of Gais Stakeholders share i the gais eared by sellig the agricultural products via E- commerce Shapley value represets the gais that will be distributed to the stakeholders (players). It provides the gais aticipated by player by oiig all possible subgroups after ivestmet. That is, the player regards the compositio of post hoc group as radom. The probability of ay sequeces of group compositio is equal. Lettig A be the set of all possible subsets of I players, the gais aticipated by player is (A )[ (A ) (A \ )] () B P R R A A Sice ay sequeces of group compariso are of equal probability, probability distributio P ( A ) is obtaied by the formula below: p (A ) (a )!( I a )! (3) I! a A is the umber of players i set A ; I is the umber of players egaged i bargaiig; R( A ) is the output of set A; R ( A \ ) is the output of set A excludig player. At time, the gais (Value Added) created will be distributed accordig to the cotract siged at time. Suppose all the players are risk eutral, i.e., all players will strive for more et gais at time. Here the right to etry theory proposed by Raa ad Zigales is adopted. We suppose that there are stakeholders who ivest ad share i the gais, so there are a total of + players bargaiig over the gais (icludig the farmer himself). By usig formula () ad (3) it is derived that the et gais aticipated by stakeholder k is a fuctio of the resources ivestmet i k that he makes. Suppose the average ivestmet of - stakeholders is i ( ), ad the equilibrium of i ( ) depeds o. Thus the et gais aticipated by stakeholder k is calculated as follows. { V [i ( ) i ( )] V [( ) i ( )]} i (4) k k ( ) Every stakeholder hopes to get the maximum et gais, i.e. the maximizatio of formula (4). First-order derivative of formula (4) with respect to i k is calculated. Utilizig the symmetry feature (Raa et. al., 998)[7], the Nash equilibrium of ( ) i is obtaied as follows: 394 Copyright c 06 SERSC

7 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) ' V [ i ( )] (5) ( ) Accordig to formula (5), the ifereces are derived as follows: Iferece : As the umber of stakeholders icreases, the average post hoc ivestmet made by the stakeholders i ( ) will decrease. Proof of iferece : Because formula (5) holds true for ay, there is ' ' V [ i ( )] V [ i ( )] ( ) ( )( ) (6) Here is proof of iferece by cotradictio. Iferece ca be proved if formula (6) does ot hold true if i ( ) i ( ). First, we prove the iferece uder the coditio of i ( ) i ( ). Substitutio of i ( ) i ( ) ito formula (6) yields: ' ' V [ i ( )] V [ i ( )] ( ) ( )( ) ' ' V [ i ( )] V [ i ( )] ( ) ( )( ) ' ' [ ] V [ i ( )] V [( ) i ( )] ( ) ( )( ) ( )( ) ' V [ i ( )] ( )( ) ' V [( ) i ( )] 0 Sice V ( i ) is a cocave productio fuctio, the followig is derived: ' V [ i ( )] ' V [( ) i ( )] ( )( ) ' ' V [( ) i ( )] V [( ) i ( )] ( )( ) 0 Here arises the cotradictio. It is oticed that the left side is smaller tha the right side of formula (6) whe i ( ) i ( ). Thus we prove by cotradictio that iferece holds true whe i ( ) i ( ). I geeral situatios, the icrease of stakeholders will result i the icrease of total post hoc ivestmet i ( ), i.e. Iferece : As the umber of stakeholders icreases, the total post hoc ivestmet will icrease. We costruct a geeral icreased value output fuctio for the proof of iferece. Substitutio of Let V ( i ) a i i, a i ' V () i a i ito formula (5) yields: Copyright c 06 SERSC 395

8 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) [ a i ( )] ( ) a i ( ) ( ) ( ) i (... ) a... ( ) ( ) ( ) (7) a i ( ) 6 Formula (5) holds true for ay, ad suppose that there are - stakeholders. The ' substitutio of V () i a i ito formula (5) yields: [ a i ( )] ( ) a i ( ) ( ) ( ) (... ) a... ( ) i ( ) ( ) ( ) a i ( ) 6 Accordig to formula (7) ad (8), there is (8) a a - - i ( ) - i ( - ) 6 6 (9) From formula (9) it is derived that i ( ) i ( ) Multiplyig the two sides of formula (0) by, there is ( ) i ( ) i ( ) i ( ) ( )( ) i ( ) ( ) i ( ) i ( ) (0) () Accordig to formula (), it is derived that i ( ) ( ) i ( ), thus iferece is proved. Eve though the total post hoc ivestmet will icrease as the umber of stakeholders icreases, it does ot mea that the farmer is willig to share the gais with ifiite umber of stakeholders. This will lead to over-ivestmet. Raa et. al. (998) proved that whe total ivestmet exceeds first best, there will be the problem of over-ivestmet. I that case, the farmer will be left with a proect with egative et gais, which is ot coducive for further developmet. 396 Copyright c 06 SERSC

9 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) Through bargaiig, the et gais aticipated by each stakeholder ca be cosidered a fuctio. However, the sharig of gais by oe stakeholder may have a adverse impact o the et gais of the other stakeholders. Iferece 3: Whe the umber of stakeholders icreases, there will be a decrease i et gais aticipated by the stakeholders. We oly prove iferece 3 uder two situatios, i.e., there are or stakeholders sharig i the gais. Whe there is stakeholder, the et gais aticipated is expressed as [ V ( i ) V (0 )] i () To maximize formula (), substitutio of V [ i ()] V (0 ) i ito formula () yields i () i () (3) Whe there are two stakeholders, the et gais aticipated by stakeholder S becomes [ V ( i ) V (0 )] { V [ i i ( )] V [ i ( )]} i 6 3 (4) To maximize formula (4), substitutio of i ito formula (4) yields i ( ) V [ i ( )] V [ i ( )] V (0 ) i ( ) (5) Because the maximum of { V [ i ()] V (0 )} / i () is obtaied by i (), it is sure to obtai { V [ i ()] V (0 )} / i () { V [( i ()] V (0 )} / i (). Moreover, sice fuctio V ( i ) is cocave productio fuctio, there is { V [ i ()] V (0 )} / 6 { V [ i ()] V (0 )} / 3, thus: V [ i( )] V [ i ( )] V (0 ) i ( ) V [ i ( )] V [ i ( )] V (0 ) i ( ) V [ i ( )] V (0 ) i ( ) { V [ i ( )] V (0 )} { V [ i ( )] V (0 )} 6 3 V [ i ( )] V (0 ) i ( ) V [ i ()] V (0 ) i () We have proved that whe there are two stakeholders, the gais aticipated by the stakeholder will be smaller as compared with the situatio where there is stakeholder. Thus iferece 3 is proved. Raa et. al. (998) believed that whe there are multiple stakeholders, they will compete fiercely for the gais, which leads to the reductio of aticipated gais. The followig coclusios are draw from these three ifereces: First, for the farmer, the ivolvemet of more stakeholders is ot the better. As more stakeholders are ivolved, the average ivestmet made by each stakeholder will decrease, which is ot coducive to optimizig resources allocatio. The total ivestmet should ot exceed the first best as the umber of stakeholders ad total ivestmet icrease, otherwise there will be the problem of over-ivestmet. Moreover, a greater umber of stakeholders does ot brig about better results, ad the farmer will be troubled by the situatio of too may stakeholders beig egaged i the maagemet. Secod, we aalyze the dyamic evolutioary model of E-commerce i agriculture Copyright c 06 SERSC 397

10 Create more gais Value Added All stakeholders ( Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) from two aspects. () Takig the stadpoit of the farmer, the cooperatio with stakeholders will icrease total ivestmet whe other factors are dismissed. Thus more gais will be produced as log as the first best is ot exceeded. The farmer will welcome the ivolvemet of more stakeholders ad make efforts to ivite i ew stakeholders. () Takig the stadpoit of stakeholders, if the ivolvemet of ew stakeholders decreases their aticipated gais, the origial stakeholders will oppose to it ad take actios to prevet the etry of more stakeholders. They may eve compel the farmer ot to cooperate with the ew stakeholders or quit the cooperatio themselves. The farmer aims to get the maximal gais from sellig the agricultural products via E- commerce. As log as the cooperatio icreases total ivestmet, the farmer will be willig to see more stakeholders comig i. However, if the etry of more stakeholders causes the gais aticipated by the origial stakeholders to decrease, the origial stakeholders may quit, thus icurrig loss to the farmer. Uder this situatio, the farmer will balace betwee the iterests of differet stakeholders ad adust his cooperatio with the stakeholders so as to gai more profits. From this perspective, the developmet of agricultural E-commerce is dyamic. Realize E-commerce by cooperatio with the farmer Stakeholders that ivest the key resources Share the gais created by sellig the agricultural products via E-commerce Quit of the origial stakeholders Dyamic evolutio of cooperatio with stakeholders The farmer will dyamically adust the cooperatio with the stakeholders depedig o the ecoomic eviromet Etry of ew stakeholders )through agricultural E-commerce Other stakeholders ot i cooperatio with the farmer Other stakeholders Obtai the market trasactio value by other meas Specific ecoomic eviromet Figure 4. Dyamic Evolutioary Model of Agricultural E-Commerce As show i Figure. 4, the farmer first chooses the stakeholders that are willig to cooperate. These stakeholders will share i the gais reaped by sellig the agricultural products via E-commerce. As the ecoomic eviromet chages, the farmer will dyamically adust the cooperatio with the stakeholders with the purpose of maximizig the gais. This may probably lead to the quit of some origial stakeholders ad the etry of ew stakeholders. 398 Copyright c 06 SERSC

11 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) 5. Coclusios Based o literature review, we first aalyze the problems existig i E-commerce i agriculture at preset. The a game aalysis is performed over the cooperatio betwee the farmer ad the stakeholders by usig icomplete cotract theory ad right to etry theory. It is foud that agricultural E-commerce udergoes dyamic, evolutioary developmet. The farmer may decide to cooperate with ew stakeholders with the goal of maximizig the gais, ad i the meatime, some origial stakeholders may quit. E- commerce i agriculture must follow a dyamic evolutioary model for it to adapt to the costatly chagig ecoomic eviromet. Ackowledgmets This study was fuded by Ahui Agricultural Uiversity key proect of school prosperity ad developmet fud: Research o corporate social resposibility i corporate goverace based o Value Added. It is the result of Agricultural Uiversity school prosperity ad developmet fud. ad This study was fuded by Ahui Provice Philosophy ad Social Scieces Plaig Proect (AH-SKQ04D46) ad Ahui Provice Natural Sciece Key Proect (KJ05A366). The authors declare that there is o coflict of iterests. Refereces [] J. J. Zhao, Some reflectios o the developmet of Chia s E-commerce i agriculture, Iquiry ito Ecoomic Issues, o., (005). [] H. R. Zhag, X. L. Huag ad Z. Z. Xie, Study o the agricultural E-commerce developmet model i Fuia, Chiese Agricultural Sciece Bulleti, o. 7, (008). [3] Y. Y. Jia, Developmet of agriculture: some reflectios o agricultural E-commerce i Guagdog, South Chia Rural Area, o. 4, (003). [4] Z. Gog, Aalysis of coditios for developig agricultural E-commerce i Jili, Joural of Ecoomic Perspectives, o. 6, (006). [5] B. Y. Peg, Aalysis of the model of agricultural E-commerce i Chia, South Chia Rural Area, o. 6, (00). [6] B. Li, Aalysis of the model of agricultural E-commerce, Chia Iformatio Times, o., (006). [7] C. Wag ad B. Luo, Aalysis ad discussio o the costructio model of agricultural E-commerce i iformatizatio cotext, Sciece ad Idustry, o., (006). [8] J. Yag, P. G. Liu ad Z. C. Wag, Study o model iovatio of agricultural E-commerce, Chia Sciece Forum, o. 8, (008). [9] S. K. Wu, New model of market-orieted E-commerce i agriculture: study o the costructio of BtoF platform, Moder Busiess, o. 7, (007). [0] Y. Ga, Y. M. Che ad J. Zhao, Curret situatio ad future of developmet of agricultural E- commerce i Chia, Agriculture Network Iformatio, o. 0, (004). [] F. M. Yi, Network-based itegratio of E-commerce platform ad supply chai of agricultural products, Fiace ad Trade Research, o. 6, (006). [] F. M. Yi ad J. Xia, Study o itegratio of supply chai of agricultural products based o E-commerce platform, Ecoomic Issues, o., (007). [3] H. Liu ad J. Liu, Study o the itegratio model of supply chai of agricultural products based i E- commerce i Zheiag, Agricultural Ecoomy, o., (008). [4] Y. H. Zhao, L. Li ad J. X. Lv, Aalysis ad discussio of agricultural E-commerce developmet, Rural Ecoomy ad Sciece-Techology, o. 5, (006). [5] J. Zou, Aalysis ad discussio of the model of third-party E-commerce i agriculture i Chia, Busiess Times, o. 9, (007). [6] J. Wag, Research o Firm Goverace Theory ad Empricial Study Based o Value Added, Doctor thesis of Hefei Uiversity of Techology, (05). [7] O. D. Hart ad J. Moore, Property Rights ad Nature of the Firm, Joural of Political Ecoomy, vol. 98, o. 6, (990). [8] R. G. Raa ad L. Zigales, Power i a Theory of the Firm, The Quarterly Joural of Ecoomics, vol. 3, o., (998). Copyright c 06 SERSC 399

12 Iteratioal Joural of u- ad e- Service, Sciece ad Techology Vol.9, No. 4 (06) Authors Ji Wag, he received his Master of maagemet i Accoutig (0) ad PhD i Busiess Admiistratio (05) from Hefei Uiversity of Techology. Now he is lecturer of Accoutig ad Iformatio Maagemet Departmet, College of Ecoomics & Maagemet, Ahui Agricultural Uiversity. His curret research iterests iclude Fiace ad Accoutig, Value Added Accoutig, Ecological Agriculture, E- Commerce ad Decisio Makig Evaluatio. Xiaolog Zhu. He received his B.S. degree from Hefei Uiversity of Techology, Hefei, Chia i 999. Now he is a doctoral cadidate i School of Maagemet, Hefei Uiversity of Techology. Curretly, Xiaolog Zhu is servig as associate professor i Ahui Busiess Vocatioal College, Hefei Ahui, Chia. His curret iterests iclude cloud computig, capital operatio ad maagemet. Che Zhag. He received his Master of maagemet i Accoutig (0) from Ahui Fiace ad Ecoomics Uiversity ad PhD i Busiess Maagemet (05) from Hefei Uiversity of Techology. Now he is lecturer of Accoutig Departmet, School of Busiess, Ahui Uiversity. His curret research iterests iclude Fiace ad Accoutig ad Corporate Goverace. 400 Copyright c 06 SERSC