Firm Competition And Efficiency Improvement Under The Penetration Of Online Market

The emergence of Internet sales channels makes the commercial attributes of the Internet explored.The rise of this new type of business is not only the establishment of a new sales channel,but also the historical process of reconstruction of traditional economic order,circulation channels and resource allocation.The Internet market is changing the efficiency of the real economic system by reshaping the market structure.This phenomenon is constantly unfolding in the world.However,the development of Internet market channels in China and its efficiency significance to the real economic system attract more attention.Such a huge and transitional economic scenario makes the impact of Internet market on economic structure more obvious.At the same time,the upsurge of innovation and entrepreneurship promoted by the Internet market has given birth to a new innovative development mode for China's economy.Therefore,the characteristic facts and cases extracted from China's unique economic background provide a unique perspective for understanding how the Internet infrastructure provided by the government can promote firm innovation,improve allocation efficiency,improve market mechanism and cultivate market competition environment.However,in the context of China,there are few literatures examining the influence of online market channels on market competition,firm innovation and industry resource allocation efficiency.In view of this,this paper attempts to promote the research branch of Internet's impact on economy in China scenario to the identification of more detailed functions of Internet,that is,to employ the Internet market channel as the core variable,which bears a far-reaching impact on China's economic market structure,business model,circulation system,region distribution and market segmentation.On this basis,this paper discusses the micro characteristic facts and mechanism of the influence of online market channel on the competition of firms and efficiency improvement in the context of China's economy from the aspects of markup,geographic expansion of market,innovation and so on.Based on the evolution of markup under the penetration of Internet market,this paper firstly examines the effect of Internet market channel penetration on markup from a micro perspective.Through this examination,this paper reveals how Internet market channels affect the market competition environment,firm competition behavior and resource allocation efficiency.It is found that the penetration of online market reduces the overall market power and pricing capability of manufacturing firms.Cities with more Internet users will face more external competition introduced by the Internet market.This makes the original regional segmentation weakened by the neutral Internet technology,thus reducing the average(overall)market power of firms,and improving the overall market competition efficiency.In addition,under the influence of online market penetration,the markup of firms in industries with higher agglomeration decreases more;the markup of firms with lower technology level and production efficiency decreases more by enduring more external competition pressure introduced by Internet market;the non-state-owned economy bears more capabilities to resist the external competition pressure introduced by online market penetration,while the state-owned economy has been greatly impacted by online market penetration;the total markup of firms in the region with a higher proportion of the tertiary industry has decreased less,indicating that the region has more capabilities to resist the external competitive pressure brought by the penetration of online market.After verifying the role of Internet market channel in promoting market competition,this paper uses existing micro data to measure the application of Internet market channel or e-commerce in the following chapters,so as to provide another research way to identify the impact of Internet market channel.In the fourth chapter,from the perspective of regional market entry and factor allocation,this paper examines the impact of the adoption of Internet sales channels in individual firms on overall resource allocation efficiency of the industry and the mechanism of this impact from the supply side.Using the framework of firm heterogeneity and new economic geography,this paper exposes the efficiency improvement mechanism triggered by Internet sales channel.By using quantile regression,this paper confirms that the distortion of factor allocation is corrected by Internet sales channels,and finds that the improving allocation efficiency mainly comes from the reallocation of labor and intermediate goods.In addition,the improvement of supply-side production efficiency triggered by Internet sales channel is mainly embodied in multi-regional sales firms by promoting the growth of small firms and expanding their market scope.In the fifth chapter,this paper discusses the influence of Internet sales channel on innovation competition.The research focuses on the research and development(R&D)competition between large firms and small and medium firms(SMEs),which is a classic topic of industrial organization theory,and provides them with the characteristic facts and micro explanations under the Internet sales channel environment.Through a simple R&D Cournot competition model,this paper puts forward the test proposition that Internet sales channels promote SMEs to carry out more R&D,and explains why this characteristic fact happens.In order to examine the above proposition,this paper uses the World Bank's China enterprise survey data which has been available in recent years to build a four-year span(1999-2002)unbalanced panel.It is found that although the Internet sales channel reduces the marketing cost of products,it has a greater impact on SMEs.As the Internet sales channel breaks the market barriers that formerly restrict the innovation of SMEs,the "survival desire" of entering the market through innovation and the "competition desire" of challenging the incumbent larger firms will be stimulated in SMEs.Therefore,the characteristic fact that SMEs are more motivated to carry out R&D can be presented in the research conclusions(theoretical or empirical),especially in the scenario of Internet sales channels.In the sixth chapter,this paper discusses the heterogeneous impact of e-selling on innovation(measured by new product sales(NPD)),so as to provide strategic choices for firms to improve their innovation performance through e-commerce strategy.By using firm size and firm experience as basic moderators,we develop our empirical model using the GMMthreshold approach.To show how e-selling affects firms' NPD and explore its implications for managers,we employ other firm features for more heterogeneity analyses,including Internet market penetration,sales volume,computer penetration and firm ownership form.It is found that e-selling has a positive effect on NPD for smaller firms,as well as on larger firms with more operational experience.Additionally,e-selling has a decreasing(or non-increasing)effect on NPD in smaller firms when those antecedents increase,whereas in larger firms e-selling has an increasing(or nondecreasing)effect on NPD.Additionally,we find that e-selling has an insignificant effect on state-owned enterprises(SOEs),but a positive effect on non-SOEs.Through the above research,this paper summarizes the characteristic facts of the effect of Internet on socio-economic variables,so as to extract useful experience and policy guidance for the new stage of China's economic development led by the Internet.What's more,this paper extends the research branch of Internet's influence on economy to the identification of Internet's more detailed function,so as to clarify the function boundary of Internet sales channel and Internet technology,as well as the specific function and effect of each attribute of Internet,and even make policy makers more targeted,more clear and effective in formulating Internet development strategy and matching different policies.At the same time,by clarifying the heterogenous effect of Internet market channel on different regions or individual agents,we can understand the mechanism,characteristic facts and laws of the role of Internet market channel in market structure,resource allocation and innovative activities,which has more practical significances for guiding policy-making,macro-economy management and economy development.Additionally,in the Internet environment,the behavior of economic individuals and the market environment have also been changed unprecedentedly.An in-depth understanding of the operation mechanism under the Internet economy will also help managers better adapt to the changes in the economic environment and formulate corresponding innovation and development strategies.Finally,the unique attributes of China's economy provide rich research scenarios for related researches and policy evaluation projects.Therefore,the development of China's Internet economy and its great role in China's economic growth and reform are valuable experiences of China's reform and opening up in the last 40 years,which are of rich practical significance and worthy of promotion and reference.This paper can provide China's experiences and cases for other countries to use the Internet market channel to improve their innovation abilities and allocation efficiencies.Additionally,it can also offer a unique perspective for understanding how the Internet infrastructure provided by the government can promote firm competition,resource allocation efficiency and innovative vitality.