A Study On Market Structure, Competitive Strategy And Public Policy Of Network Industries

The network structure and interaction between nodes have exerted significant influences on the economic behaviors and the market operation. With the existence of network effects, the network economy demonstrates some new characteristics, which are distinctively different from the traditional economy. Hence, in-depth theoretical and applied researches on network economics are of great importance.Based on network effects theory, which is the essence of network economics, the thesis systematically studies the economics of network industries, with emphasis on the market structure, competitive strategy and public policy. It analyzes the peculiarity of market structure and its underlying causes, interprets the motivation behind firms' strategic behaviors and put forward corresponding public policy framework. It is aimed at providing useful guidance for firms to optimize their strategies in face of fierce competition in the market, and help government remedy market failure and avoid possible government failure, so that the social welfare could be maximized and efficiency loss could be minimized.In accordance with the research framework, the thesis conducts the literature review on classic network effects theories, applied research, empirical study and domestic research. It then illustrates the economics of network effects, compares the difference between network effects and network externalities, and explains concepts such as critical mass, positive feedback, lock-in and path-dependence. Next, it analyzes the influence of network effects on market structure and points out that "neo-oligopoly" is common in network industries. The form of monopoly has transformed from independent monopoly to joint monopoly. Then, it studies a variety of newly emerging competitive strategies, such as dynamic pricing, inter-temporal product decision, quality choice, horizontal and vertical compatibility choice, research and development, strategic bundling and digital copyright protection strategies. In order to stimulate the sustained development of network industries, the thesis takes the factor of network effects into consideration and puts forward the policy framework and implementation principles of standard policy, antitrust policy and intellectual property protection policy. Last, it conducts a simulated economic experiment on network effects in order to study the influence of network effects, competitive strategies and public policies on consumers' decision.On the basis of current network effects research, the thesis makes some innovative explorations in terms of the following three aspects. First, it studies the market structure of network industries theoretically and empirically for the first time. On one hand, it proves the "neo-oligopoly" feature by using related theory of industrial organization and network economics; on the other hand, by collecting relevant data and using time-series tools, it does empirical analysis on the market structure of representative network industries. Second, it thoroughly analyzes typical competitive strategies based on network effects theory. Most of current research is limited to a specific competitive strategy and isolated with each other. This thesis aims to do consistent research by using modern analytical tools such as dynamic optimization and game theory and setting up a series of models. Third, it puts forward public policy suggestions with more practical implications. For instance, based on the market structure of network industries and the model conclusions of strategic bundling, it suggests that government should abandon pure structure principles and introduce more feasible implementation guidelines for antitrust policies.