Research On Network Platforms' Competition And Electronic Commerce Platform's Reputation Mechanisms

Over the past two decades,the Internet economy has experienced an extraordinary speed of development.Most of the Internet corporations are platform enterprises.These kinds of corporations behave very different from the traditional ones.How can theInternet platform corporations earn more profit? What strategies can they take? We study this issue through theoretical modelling,numerical simulation and empirical analysis.Internet platform corporations can increase profits through two channels.The first one is that when they face outside competition,they can increase their profits by choosing a better competitive strategy;the second one is that these corporations can increase their profits by improving their operational efficiency.Compared to traditional enterprises,Internet platform corporations possess two unique characteristics: network externality and enabling their users to interact with each other more freely.Therefore,we must consider these two characteristics when we study the profit making issues of these kinds of corporations.In order to analyze the first channel,we build a two-stage model on platforms competition.In stage one,the first mover enters the market and acquires the user base first.In stage two,the open source platform enthers the market to compete with the first mover.Faced with such competition,the first mover should adjust its price accordingly.The theoretical and numerical simulation results show that,when the network externality is large,the first mover will set a lower price to acquire more users.As for the second channel,we analyze one of the reasons why the current reputation mechanism of an e-commerce platform may fail.Our results show that if some negative comments are given because of wrong expectations,the reputation mechanism will fail.We also do some empirical analysis using the data collected from Taobao.com.We find that the buyers with low credits tend to give more negative comments.These results provide theoretical guidance to the design of the reputation mechanism.Our research can help people learn more about network externality and platforms' reputation mechanisms,which can affect Internet platform corporations' profitability.Also,our results can help these Internet platform corporations choose a better strategy to compete with others and improve their operation.