Abstract: The relationships between the knowledge re-creation and the inputs, the absorption rate as well as the game cycle were studied based on the Stackelberg model of produce market in the industrial cluster. It was found that the knowledge re-creation of small businesses are more dynamical than large ones. The knowledge re-creation activities in Silicon Valley and the Highway 128 were discussed. The network industrial system improves the competition between the large companies and small enterprises in Silicon Valley, which gives the learning atmosphere and dynamic of knowledge re-creation. While the Highway 128 industrial system which makes the large companies in the center leads the small enterprises to live in difficulty, absent competition and slow knowledge re-creation.